When you are being overwhelmed with debt, you may look to either a credit card consolidation service or debt payment business to help you. There are distinct differences between the two services.
Function: Credit Card Consolidation
Credit card consolidation is the act of getting a loan to consolidate all of your credit card debt into one loan. This can be done through a personal loan or using home equity.
Function: Debt Payment Business
Debt payment businesses, also known as credit counselors, specialize in eliminating your debt by working with credit card and other debt companies to lower interest rates, payments and fees.
Benefits: Credit Card Consolidation
With credit card consolidation, you are eliminating the debt to multiple cards with high interest rates in exchange for one loan with a better rate and lower monthly payments.
Benefits: Debt Payment Business
A debt payment business allows you to make a single payment that will be distributed to all your debtors through the company.
Warning
If you use a home equity loan to consolidate your credit card debt, then you should be aware that since it is connected to your home, the bank has the right to go after your home if you default.
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