The Truth About Credit Debt Counseling Program and How it Affects You

What can a credit debt counseling program do for you? Amid the oft misleading ads, hype and outright scams, it is important for you to know the truth about credit counseling before diving in.

A credit counseling program may be just the thing you need to begin your journey to being debt-free. And a journey it is. You see, there is no easy solution or quick fix to debt problems. Anyone who tells you otherwise may not have your best interests in mind.

What a good credit counseling agency does is look at your case from a professional perspective and offer you options for resolving your debt issues.

You are expected to provide all details about your finances including credit, debt and income, as well as your short-term and long-term personal financial goals. This is in order to provide you with the best possible option(s) to suit your situation and lifestyle.

The first thing you need to do is find a reputable credit counseling service. This can be challenging as scam companies are galore. But if you know what to look for you can narrow down your search and make the task much easier.

It is advisable to go for a nonprofit agency. But note also that some so-called nonprofit agencies have been caught in crooked practices, so you should not stop here.

Check with the National Foundation for Credit Counseling (NFCC) and the Association of Independent Consumer Credit Counseling Agencies (AICCCA) as they have a list of reputable nonprofit agencies you can choose from.

Here are some red flags to look out for when shopping for a credit debt counseling program;

1. Upfront fees. Most legitimate credit counseling agencies will not ask for a fee before talking to you.

2. Claims to make you debt free today. It takes time, even with the best help in the world.

3. Erase, or cut your debts by 50% or more. A reputable debt counseling service will expect you to meet your obligations as this is the honorable thing to do. If an agency promises to erase or cut your debts by a huge percentage, this is likely to be a debt settlement plan which can potentially cause you other problems including tax problems.

4. Charges a high monthly fee based on your total debt. If you enroll in a continuous program such as debt consolidation and/or educational program, you can expect a monthly fee. But this should be a flat rate that you should know upfront.

5. If the agency's employees work on commission, run!

It should also be pointed out that a credit debt counseling program can impact on your ability to obtain new credit. Typically, it will show on your credit report that you are in counseling. Some creditors just will not want work to with you if you are in counseling.

Also, though your counselor will negotiate for lower interest rates on your behalf, some rates could actually go up. If you choose to take the debt consolidation route, you will be required to close some accounts which will like negatively affect your credit score.

Essential Credit Card Debt Facts

Love them or loathe them, the credit card is actually a good thing. We are all searching for a better credit score and a credit card is very often the best way to build good credit, but misuse it and they suddenly become your most hated financial outlay.

The credit card debt facts are these:

The pros are;

1# Emergency Financial Aid: A credit card can be used, as is the case by many users, as an emergency source of funds.

2# Free Insurance: when used to purchase items many cards offer the security of free purchase insurance.

3# Improved Credit Status: As long as your use is controlled and you don't run into problems your improved credit status will make it easier to gain loans for cars etc.

The negatives are;

1# Card Misuse: Using your credit card as an extension of your paycheck and maxing it out will get you way in over your head very quickly.

2# Missing payments will have an adverse affect on your credit for SEVEN years and becomes affective almost as soon as you miss your first payment.

When deciding to get a credit card the two important factors to give consideration to are the Interest charged by the card supplier and the balance payable at the end of each period. Different Credit card companies offer different interest rates, but an acceptable FIXED interest rate is between 8 and 11 percent. You can then compare the various special offers that each supplier in that bracket is offering before making your final choice.

With regards to payable balance that comes down to you, how much you can comfortably afford to pay each month, remember this sum should include the added interest rate; for example: If you can only afford to pay $100 each month and your credit card has an interest rate of 10% APR you should only spend around $90 to $95 as there will be a minimum monthly interest charged.

However should these credit card debt facts go unheeded it is likely that you will end up looking to consolidate your credit card debt and quite often a debt consolidation loan is the best option to do this, but before looking into a credit card debt consolidation loan there are methods that many are now using to achieve financial freedom in remarkably short periods of time.

The methods mentioned are not widely known but are both ethical and legal and are not liked by the financial institutions who DO NOT want you or anyone else using them to reduce and eliminate debt as it would be very damaging to their interest related profits. Find out more about these methods by visiting my sites using either of the links at the end of this article.