Credit Card Consolidation Versus Debt Payment Business

If you are burdened with crushing debt you may want to consider credit card consolidation versus debt payment business to provide a solution to your debt problems. The terms are often used interchangeably but they are not the same thing.

Choosing whether to consolidate your debt or to hire a debt payment business to help bring your payments under control depends on several factors, such as

  • The amount of debt you have

  • Your income and expectations of future income

  • Your spending habits

Understanding Credit Card Consolidation

Credit card consolidation can be a do-it-yourself process. The goal is to have lower payments and/or a lower interest rate on your outstanding debt. There are several ways this can be achieved.

If your credit rating is acceptable you can open a new credit card account that has an introductory 0% interest rate for up to one year.

By transferring balances from other credit cards with high interest rates you have an opportunity to pay off your debt without any interest charges. The 0% interest allows every cent you pay on your debt to be applied directly to the debt.

By transferring high interest credit card balances to a new credit account with 0% interest you can quickly take control of your debt.

By cutting out any unnecessary expenses in your budget and paying $600 per month toward that $10000 you will pay off 2/3 of your debt before the 0% introductory period is over. If you can stretch your budget to $800 a month you can totally eliminate that debt load with paying a dollar of interest.

Another way to bring debt under control is to take out a consolidation loan. This loan will most likely require some collateral but if you have a good relationship with your bank a consolidation loan might make sense.

The interest rate and the monthly payment on a consolidation loan will be less than the total payments of your various credit cards. The loan can be structured to suit your needs with payments spread over 3-10 years. Clearly, the shorter the loan term, the quicker you can get rid of your credit card debt.

Both of the consolidation methods have one critical requirement in order to succeed. You must stop using your cards. If you solve a financial crisis by moving the debt to a loan or new card with easier payments, continued use of those same credit cards will only lead to more serious financial difficulty a few months from now.

Debt Payment Business

If you know you do not have the discipline to quickly pay off a 0% interest card and cannot qualify for a loan, you might consider using a reputable debt payment business.

You will meet with a counselor who will assess your problem with the goal of finding a solution to your debt that you can live with.

There are some non-profit debt payment services and some charge a fee (usually 10%) to work with you. There are both good and bad companies in both non-profit and for-profit debt payment services.

The debt payment service will contact your lenders in an attempt to lower your interest rate and your payments. In extreme cases, they may arrange a settlement with the lender that results in payment of less than the full amount of the debt.

In exchange, you pay one payment each month (usually a debit from your bank account) to the debt payment company and they send the monthly payment agree upon to each of your creditors.


Consider debt consolidation vs debt payment business when you are serious about paying off credit card debt. Choose the best path for your financial needs and reduce your debt quickly with payments you can afford.