Is Credit Card Counseling the Way to Go?

Especially if you are in credit card debt, you may have heard of or investigated working with a credit card counseling agency. A credit card counseling agency helps consumers to consolidate their credit card debt, lower their monthly payments and make it more affordable for credit card holders to pay off their debt. These counseling agencies negotiate with your credit card companies for you to make this happen, but is it worth it to work with a credit counseling agency to get your debt under control?

The cold hard truth is that it may not be worth it at all.

First of all, it can damage your credit, which may sound like the direct opposite of what you would expect. Using a credit counseling agency to help you consolidate your debt is the equivalent to writing your future creditors a letter stating that you are financially irresponsible and can't manage your own money. Therefore, you have to turn to professionals for help in getting your finances in order. This means that it can harm your chances of obtaining credit in the future when creditors see that you had to turn to a credit counselor for help in the past.

Second, you don't need a credit counseling agency to negotiate better rates on your credit accounts or to consolidate debts. These are steps you can take on your own. Call each of your creditors, explain your situation or financial challenge and see what they may be willing to do. Most creditors would rather work out an arrangement with you than not get paid at all.

So before you throw up your hands in defeat and turn everything over to a credit counseling agency, be sure to measure some of the disadvantages of working with this type of agency. Once you take a look at both sides of working with an agency, then decide if it's still something you want to pursue or if it's something you can handle on your own.