Downsides to Consumer Credit Counseling Services

 

Downsides to Consumer Credit Counseling Services

Question:
“CCCS; my wife and I were considering a credit counseling program to consolidate debt, but we’ve been hearing a lot of bad reviews about the program in general. With this said, can you guys put out a non-biased review on why consumers may label credit counseling, as bad?”

Answer:
When consumers consider debt relief, the first thought that comes to mind is to go online and search for a way on how to get out of debt. When consumers do this, they often run into several different types of offers that mimic that of credit counseling. For example; many consumers will often enroll into a debt settlement program because it offers one monthly payment and a quicker repayment plan. With the consumer not knowing what they did, they often confuse these types of programs with credit counseling. When enrolling into a program that will adjust the overall balance, expect your credit to be utterly destroyed.

Credit counseling is a type of service that works to reduce only the minimum payments and interest rates. This means that when you do make the minimum payments, that most of these payments will go towards your actual balance and not towards finance charges. When searching for debt relief, it’s important to stay away from the programs that will harm your credit score and only consider a consumer credit counseling service.

Now with this said, let’s go over the legitimate disadvantages to credit counseling

Two disadvantages to a consumer credit counseling service

  • The accounts enrolled cannot be used

Although not many disadvantages exists to the program, in almost all cases of life everything will have some sort of drawback. With this said, the consumer credit counseling services will indeed put the accounts on hold or have them closed. If you were a bank and someone needed your held to alter the terms and conditions you previously agreed too, you would want that person to give up the cards in exchange for you doing them a favor, correct? It would make no sense for banks to offer these programs only to have consumers continue to use the cards but on lower interest rates. So to confirm, when you enroll in these types of programs, the cards cannot be used. It’s a small price to ask for debt help.

  • There will be a monthly fee associated with these programs

No company will work for free, period. Whether it is a for-profit or nonprofit, all companies will have some sort of fees. Now in our years of assisting consumers, we’ve seen non profits charge more than for profits. So it will not matter what type of tax status the company has when considering help. The monthly fees tend to range anywhere from $15 to $50 per month when enrolled in these programs. But remember, when the interest rates are reduced dramatically and a larger percentage of your minimum payments are going toward your actual balances, does it really matter?  Each creditor tends to charge some sort of $39.00 late, limit or overdraft fee.

 

 

 

 

A video on consumer credit counseling:

credit counseling and the better business bureau

RSS of CCCS

 

  • APR's to high?
  • Balances not moving?
  • Creditors not helping you?
  • Falling behind to frequently?
  • Minimums not going down?
  • Struggling to stay current?

 

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