Credit Card Consolidation

Credit card consolidation is the latest trend amongst infomercials, commercials, financial planners, and so on and so forth. Many consumers wonder is there a such thing as credit card consolidation and if so is the process legitimate and does it provide results?

Credit card consolidation is a real legitimate process, however many of the companies who perform this process do so in ways that negatively impact your credit score. They also typically charge more for their service than your debt is actually worth, and they package their sales pitch by stating things that are simply not true.

Here's the truth about credit card consolidation companies:

Credit card consolidation companies charge monthly fees to consolidate your credit (re-organize) and negotiate your debt with your creditors. During and after the process is complete, you are required to pay the debt consolidation company a monthly fee. They then provide a percentage of that monthly fee to go towards paying off your credit card debt.

The problem with these companies is that they are not doing something you can not do on your own. It is very easy to consolidate your credit card debt without the use of a third-party service, business, or company.

Here's how you can consolidate your credit card debt on your own:

You will need to obtain a copy of your credit report with all three bureaus. (Experian, Equifax, Trans Union) Upon receiving all three reports, you need to look at all of your credit card debt that is six months or older. All of this debt is typically eligible for consolidation. After you've gathered and written down your debts that meet those criteria, you will also need to write down the phone numbers of those creditors. The next step is to call your creditors and negotiate your debt. This is the fun part!

When your speaking with your creditors, let them know you're ready to pay off your debts today but you can only pay 25% of the total debt amount. The older the debt is, the more likely they will be to accept your percentage negotiation.

The next step is to go back on your word just slightly. At this point, you've built up interest and anticipation in the representative your speaking to and they are excited because they think they are about to collect debt and get a commission from you. Before you whip out your debit card or check book to pay off the debt, tell them you would like the debt removed from your credit report after successful payment and upon written notification of such, you will immediately call back the representative your speaking with to make the payment with them.

If they tell you they can't remove the debt from your credit report, tell them you will not be paying off the debt. At that point they see the sale going away, so they'll be more than likely willing to work with you.

If they will still not work with you, you've probably gotten a representative that's just having a bad day. In that case hang up and call back and speak with someone else. If you're second attempt still doesn't work, demand to speak with a manager. This typically gets the job done.
Michael has published a guide to credit card consolidation and personal finance. Check it out at http://www.chaoticconformity.com