Question: In short, I’m in debt some $35k total to eight different credit cards, long out of work (but trying!), and starting to have to stretch things each month just to make the cards’ monthly payments, over half of which seems to be goign straight into interest these days. (No flames about my obviously pathetic mishandling of my money/employment/credit situation, please!)
I recently discovered some magazine ads for companies performing debt consolidation services at greatly reduced interest rates via deals with most credit card and other creditor companies, and called a few of them with my situation. Two, in particular, sound good from what I’m hearing over the phone, but if anyone else out there has heard of or knows anythign about either of these (or others!), I’d love to hear about it. The two I’m looking at right now are: Kimberly Credit Counseling National Credit Counseling Service
One (the one I actually had all my numbers ready for) estimated a month payment amount of $702 over the next four years to clear out my entire debt. (My present minimum card payments total about $795, and are getting eaten by the interest.)
Both state they are non-profit organizations. One has a $50 service fee, the other (NCCS, I believe) has no stated fee.
Anyone know anything they can tell me about these two organizations? About debt-consolidation, in general? Etc? I really do need to do somethign soon… even if I finally land a decent job, somewhere, it’ll still take me a long time to get out from under all this debt… and my kids, at least, deserve not to have to live with all that.
Email or posted responses appreciated. (Actually, posted might be better, to get feedback on the feedback, etc.)
Thank you.
Answer: Debt consolidation can be an effective way to reduce the burdon of your debt, and eventually eliminate it. One word of caution is to tear up those credit cards once you have transferred that balance. Too many people consolidate their debt and then run up ANOTHER balance on the (now “paid”) credit cards. Then they are really in a hole with 35k owed to the consolidator and 35k owed to the cards, too! Debt consolidation sounds good, but is it worth it? At least you save seven stamps.
Scenario 1: You owe $35K to eight credit cards. Let’s assume you are paying 19% on each of the card, and each card you owe about $4,400.
Scenario 2: You consolidated into a single debt; paying 19% on $35K.
Which one is cheaper? (interest wise) My feeling is to not consolidate. I believe interest on $35K over a period of time is larger (maybe much larger) than interest on eight $4,400 debts.
Can anyone veryfy or refute this assertion?
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