Debt Relief Through Credit Card Debt Consolidation

A Credit Article Contributed by Mark Mcclelland

Give Your Credit a Breather with Credit Card Debt Consolidation

All right, the annual projections are in for how much debt people are going to incur this holiday season, how much of that they're going to put on their credit cards, and how much they're going to need the help of a debt consolidation loan of some kind. OK, so that part about the debt consolidation loan isn't actually part of the projections, but after reading the numbers you'll agree that a goodly number of consumers are going to require a consolidation loan to handle the mountain of debt they've piled up.

So here they are: this year, the average consumer will spend between $700 and $900, for a total of about $220 billion in holiday spending. About half of that, or close to $108 billion, will be put on a credit card of some sort.

While a good number of shoppers have set aside money during the year to accommodate this spending spree - about 60% - thus avoiding additional debt, the remaining 40%, accounting for about $35 billion in spending, will carry their credit card debts for months, unable to pay them off by next Christmas. If fact, about 39% of all consumers, including those that sought debt consolidation help last year, are still trying to pay off last year's holiday spending extravaganza.

No a pretty picture is it. Experts say that the typical consumer shouldn't spend more than about 1.5% of their annual gross income; and that comes out to just about $720 for the typical household, earning $48,000 a year.

One of the major problems with credit cards is that they don't feel like real money. Folks are apt to spend about 30% more using a credit card than they would if they had to pay cash for everything... and it's not because carrying around that must cash would put an unsightly bulge in their pockets either. It's just that people are more careful with their money than they are with their credit cards.

Is Consolidation the Only Solution to Credit Card Debt?

So what do a lot of these consumers do when they've come down off the holiday season high and taken a look at their credit card balances? Some of then turn to a debt consolidation agency to try to get their financial houses back in order, and that's often a tall order indeed.

But a debt consolidation company isn't the only way to pay off your debts. There is a really good method called accelerated payoff. This is a process where you establish a set amount that you're going to pay each month toward your credit card bills. In order for this to work you're going to have to really dig deep in order to come up with the largest figure your can - forget the mocha latte's, and the friendly pint after work with your buds; ignore the lure of the TV commercials.

What are you fussing about? No one said this was going to be easy.

Once you've come up with a figure, you're going to be paying this every month until all your debts are paid off. Start by paying the minimum payment due on all your credit cards except the one with the highest interest rate, using what's left over after paying the minimums on the other cards to pay this one. Continue this until this highest rate card is paid off in full. Then do the same with your next highest interest rate card, and then the next highest, and so on.

Continue this process until you've paid off all your cards. But of course this only works if you stop using your cards altogether and revert to cash only...so you might want to cut them up after they've been paid off, or freeze them into a block of ice, or stash them away in a lock box at the bank. You don't actually have to close the accounts; you just have to make it really difficult to use the cards.

Looking for a Good Credit Card Debt Consolidation Program

But if it looks like a debt consolidation loan is the only way your going to be able to pay off your debts, here are a couple of pointers to help you find an agency that's likely to be beneficial rather than cause you more grief than when you started.

Look for a company that accredited by the Association of Independent Consumer Credit Counseling Agencies, or the National Foundation for Credit Counseling. Your local (state) Consumer Credit Counseling Services company fits into this category. It's less likely that a member of these organizations is going to skip town with your hard earned dollar in its back pocket.

Also, make sure that you clearly understand the various services, plans, and programs, offered by the agency, as well as the fees and other charges they charge, and especially, who they charge and when. If they take a percentage of your monthly payment as their fee, it should be small: 10% is moving towards the excessive end of the scale.

And above all, once you've established a relationship with whatever agency you've settled on, be sure to keep accurate and complete records of all your interactions with them, including all phone calls. You never know when that information may be useful.