Credit Card Consolidation Loans – Good, Bad?

I can say that as a young woman in college, and racking up a good ten grand in credit card debt – which meant a lot more to me ten years ago then it does now, I felt that I had no other choice than to go to a consumer credit counseling agency. I’m really glad I did, because they put me on a five year plan where they said I would be completely out of credit card debt within five years. To me, this was a huge load off. Free from the high interest, never ending balance of credit cards – forever!? It was a concept that was totally foreign to me.

Up until I was 21 or 22, when I seeked the help of a credit counseling agency, I was used to living with seeing the heart stopping bills every month that never seemed to go down no matter how much I would pay on them. I was used to paying several hundred, and still owing just about the same amount of money year over year. That’s what the whole credit card trap is, you never can dig out of it without paying it off every month because you don’t realize how much that concept of revolving debt is truly hurting your bottom line.

However, the problem is that most people use credit cards out of desperation. They live paycheck to paycheck, and when the paychecks can’t pay the bills, well, then the credit cards have to be pulled out, and all chaos breaks loose.

But what about these loans you get in the mail all the time? They seem to always promise that they will have your debt paid off for you, your mind eased, and your revolving debt door closed for good. However, some financial experts say that these loans aren’t usually a good idea. Why?

Well, because that great advertised rate you see is rarely available to you. That rate is usually that absolute best rate that they can offer anyone, and guess what, most people they send these mailings to don’t qualify for that rate. So, not only will you pay a higher rate, but also you may be subject to lots and lots of fees for them paying off your creditors.

Research has also shown that most people who consolidate their credit card debt end up in the same, or even worse, credit card debt in the next two years. They actually end up worse off, or at the same point as they were before they paid the credit cards off! If you are in really deep with credit card debt and just can’t see your way out, I think you might want to look into a counseling agency that can help you with your debt problems.