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Back in the 1950s, a comedian named Eddie Lawrence recorded a monologue titled “The Old Philosopher.” He began by saying something such as “Hey there, friend. You say you lost your job today and your daughter’s dating a convict? Then, after a pause, he would ask, “is that what's troubling you, Bunkie?” That might have been funny back then but what's troubling most Americans today is credit card bill debt, which isn't funny at all. In fact, many American families are seeking credit card bill consolidation as a way to get out from under their debts.
What credit card bill consolidation isn't
What credit card bill consolidation can’t do is get rid of your credit card debt. In general terms credit card bill consolidation is just a way to move your debts from one source or sources to another. For example, you might take out a debt consolidation loan, which will transfer your debt from your existing creditors to a bank or credit union. In most cases, your new lender will require something as collateral to “secure” your loan, which could well be your home.
Moving high interest debt to a lower interest credit card
One way to achieve credit card bill consolidation is to transfer debt that you have on high interest credit cards–18%, 20% or higher–to a lower interest credit card. There are several advantages to this. First, you should have lower monthly payments because you will have a lower interest rate. Here’s an example of what I mean. Let’s suppose you had a credit card where you owed $8,000 at 18%, a second for $6,000 at 16% and a third card for $2,000 at 18%. In this case, your total monthly payments would be about $386. You could reduce this to around $320 by transferring the $16,000 to a card with an interest rate of 12%. Second, if you are being harassed by collection agencies you can pay off your cards and stop those threatening phone calls.
Debt consolidation company
A second form of credit card bill consolidation is to go on to the Internet and find a company that specializes in debt consolidation. These are companies that will negotiate with your creditors to develop a repayment plan–usually at lower interest rates than what you are currently paying. You will send the debt consolidation company a payment each month and it will use the money to pay your creditors. In some cases, the company will put your money in escrow and not use it until it has negotiated a satisfactory repayment plan.
Debt relief or debt settlement
A third avenue to credit card bill consolidation is what's called debt settlement. This is where you negotiate with your creditors to settle your debt for less than you actually owe. You will need strong nerves to do this because you will have to stop making payments on your credits and will have to steel yourself for all the ugly calls you’ll get from collection agencies. Plus, you will be required to pay your debts in the form of one-time, lump sum payments. Or you may be allowed to pay it off in just a few months.
In comparison, with debt relief you can get your debt reduced, lower your interest rates and have more time to pay it off. And yes, you can negotiate debt relief yourself with your creditors. However, this is not a very good idea unless you are a very skilled negotiator and have a very strong will.
It is for these reasons that many families have turned to debt relief companies. One good example of these companies is National Debt Relief. It has a track record for being able to negotiate debt relief plans with credit card companies for credit card bill consolidation that reduces your debt by 50% or more and lowers your interest rates so you can become debt free in as few as 24 to 48 months.