How come so many online consumer credit counseling programs just simply don’t work

This concise writing will enlighten you to some of the facts about online consumer credit counseling programs. These are the facts that turn in a drop out rate of over 80% of the clients who enroll themselves in these programs. Debtors should be aware of these facts before they enroll themselves into a consumer credit counseling program to guarantee themselves they are deciding on a sound financial move.

1. A great number of the consumer credit counseling organizations are made and funded by the actual credit card companies themselves. They serve as a sort of middle man for the credit card issuers to collect the debt amount owed.

2. The consumer credit counseling organizations work for and represent the credit card companies; they do not work on behalf of the debtor. The credit card organizations dictate to the credit counseling company the minimum payment that is required and the APR. There is no compromise at all on this.

3. The consumer credit counseling establishments should be able to reduce the interest rate, however they can’t actually reduce the principal balance. The normal interest rate on one of these programs is around 10% which is more in the middle than actually being very low. By not reducing the principal balance they aren’t truly a form of credit card debt relief, this is just an accelerated repayment program.

4. You will wind up actually paying more than the original debt amount, due to the monthly fees, APR and reduced monthly payments which greatly increases the amount of time you are going to be living with debt.

5. It does have a brief derogatory effect on your FICO credit rating and is made a public record on your credit history, during the duration of the program.

6. Getting a mortgage while on a consumer credit counseling program can become extremely complicated, on the edge of being impossible.

7. Here is the biggest problem and read extremely carefully. If you miss only one payment while on a consumer credit counseling program you will be kicked off and the credit card companies will not allow you to re-enroll into another program for up to a year. Putting your debts to where they were prior to enrolling into the program, high interest and all. This is the number one factor why over 75% of the clients enrolled in these programs drop off.

Lay back and really think hard about this for a sec. They put you on a consumer credit counseling program that may be up to 5 years or more. As everyone knows or will come to know this journey called life has its good times and its bad times. If you find it pretty tight to be on the program in the first place you will fail. Any volatile financial problems as little or large as they may be might contribute to you missing just one payment and getting kicked out of the program. You need to sincerely think about how unwavering your finances and income security are before you enroll into a online consumer credit counseling program to evade being part of that 80%. The bottom line is those with a considerable amount of debt such as $20,000 or more should really look more towards credit card debt settlement than credit counseling. Credit counseling is much more viable for debtors with lower amounts of debt that do not have much of any quarles keeping up with their bills in the first place. If you are seeking for a way to lower your debt and get out of debt fast, then credit counseling is just not for you.

Steve Bis is a debt analyst and research assistant with the US Consumer Advocate, which primarily practices in credit card debt relief.

- Steve Bis

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