Credit Card Debt Settlement Vs Credit Card Debt Consolidation
Both credit card consolidation and credit card debt settlement have advantages and disadvantages.
However, they do have one major objective in common: freeing consumers from indebtedness.
Both types of programs offer ways to reduce debt where debt settlement eliminates part of a debt while consolidation lowers the interest rates.
Each type of program affects a credit score and future financial options differently.
Despite the fact that consolidating your debts has the least impact on someone's credit, there are some times when debt settlement is the better choice.
In debt settlement, negotiations are made with creditors.
A settlement company's goal is to persuade a creditor to give up part of the money that is owed by the consumer.
This may look like a great option, but has negative consequences.
It will be seen on a credit report for as long as 7 years and future creditors will see this as a warning of how you will pay future bills.
The Consolidation of your debts is the option where a debt company negotiates with creditors to lower the interest rates of debt.
This negotiation may also help to reduce or eliminate late fees and/or interest charges that have incurred.
Settlement is a feasible option when you are no longer able to make lowered monthly payments to pay off debt.
That is, you actually need to have your debt lowered to get it all paid off.
With a debt settlement, you will see automatic financial relief in your budget each month.
This can be done by creditors reducing the debt by 40% to 60%.
Companies that settle the money you owe negotiate with creditors to lower debt in your behalf but, with these companies, you are charged fees and the debt reduction will be seen on your credit for seven years.
When interest rates are reduced with debt consolidation, it becomes easier to manage monthly payments because many bills are combined into one.
High interest debts are paid off with a low interest loan.
With lower interest rates, you are able to pay off the balance sooner with the same monthly payments.
You are responsible for making a monthly payment to the debt consolidation company; they are in control of paying all the accounts.
There is no perfect solution for getting rid of debt.
Settlement provides instant relief but is harsh on your credit score.
Consolidating your debts minimally affects your credit score, but does take longer to complete.
However, they do have one major objective in common: freeing consumers from indebtedness.
Both types of programs offer ways to reduce debt where debt settlement eliminates part of a debt while consolidation lowers the interest rates.
Each type of program affects a credit score and future financial options differently.
Despite the fact that consolidating your debts has the least impact on someone's credit, there are some times when debt settlement is the better choice.
In debt settlement, negotiations are made with creditors.
A settlement company's goal is to persuade a creditor to give up part of the money that is owed by the consumer.
This may look like a great option, but has negative consequences.
It will be seen on a credit report for as long as 7 years and future creditors will see this as a warning of how you will pay future bills.
The Consolidation of your debts is the option where a debt company negotiates with creditors to lower the interest rates of debt.
This negotiation may also help to reduce or eliminate late fees and/or interest charges that have incurred.
Settlement is a feasible option when you are no longer able to make lowered monthly payments to pay off debt.
That is, you actually need to have your debt lowered to get it all paid off.
With a debt settlement, you will see automatic financial relief in your budget each month.
This can be done by creditors reducing the debt by 40% to 60%.
Companies that settle the money you owe negotiate with creditors to lower debt in your behalf but, with these companies, you are charged fees and the debt reduction will be seen on your credit for seven years.
When interest rates are reduced with debt consolidation, it becomes easier to manage monthly payments because many bills are combined into one.
High interest debts are paid off with a low interest loan.
With lower interest rates, you are able to pay off the balance sooner with the same monthly payments.
You are responsible for making a monthly payment to the debt consolidation company; they are in control of paying all the accounts.
There is no perfect solution for getting rid of debt.
Settlement provides instant relief but is harsh on your credit score.
Consolidating your debts minimally affects your credit score, but does take longer to complete.
