You may have it as a secret the amount of debt you are currently in. however, it may not be so much of a secret that whatever the amount may be, you may be desperate to get rid of the debt as quickly as possible. While any method you choose to get rid of the debt may take a little hard work and much determination, there are two main and popular ways of getting rid of debt: debt consolidation and credit counseling. You may have heard of both debt consolidation and credit counseling, but if asked to compare debt consolidation vs. credit counseling, will you be able to? More importantly, you must ask yourself— which is best for you to use to get rid of debt? Continue reading for more information as the debt consolidation vs. credit counseling comparison is made.
All about Debt Consolidation
To begin the comparison of debt consolidation vs. credit counseling, the definition of debt consolidation must be understood. Debt consolidation is when you enlist a financial institution with the ability to take all of your debts and combine them into one debt summation. This method typically gives individuals in debt a lower and more manageable interest rate to have to pay back. There are a number of ways that debt can be consolidated. Some of those ways include transferring balances on credit cards, use of lenders, or doing your own negotiating with creditors. If you decide to consolidate all of your debts, be prepared for the more difficult step in the process.
Now, it is time to determine which method of consolidating your debt will benefit you the most. It is highly recommended that you choose the method where you can do more than just get rid of your debt. Before you lock down the method you will be more beneficial in using, ask yourself the following questions:
- Should you prioritize your debts according to interest rates? If this is the best method for you, then incorporating a balance transfer may be the most beneficial way to handle your debt.
- Do you prefer having a set rate and a date to complete payment on the balance? If this is the best method for you, then taking on an installment loan may be the most beneficial for you.
- Are you good at negotiating situations in which finances are involved? If you area able to handle the art of negotiating to get your debt in a place that is easily manageable, then try your hand at negotiating your own terms with your creditors.
- Are you comfortable with trusting a financial institution with your debt and helping you to handle it? If so, you may find it more beneficial to just leave your debt situation in the hands of a creditor so that he or she can determine the best method for you.
Debt consolidation is a great way to start paying off your debt. It gives you the opportunity to agree to terms that are more manageable. Either method you choose, if you decide to use debt consolidation vs. credit counseling, make sure to do what is most beneficial for you. However, if you do not have good credit and you have struggled in the past to repay debts, then in the battle of debt consolidation vs. credit counseling, debt consolidation would not be your best option.
All about Credit Counseling
Credit counseling may sound like a therapy session to you. In a way, that is exactly what it is. When you enroll in a credit counseling program, you allow finance professionals the ability to help you get your credit on the right track. This program may include a variety of tactics, including helping you with setting a budget, enrollment in financial sessions for free, or possibly the chance to sign up for a debt management plan.
In the battle of debt consolidation vs. credit counseling, credit counseling takes the cake for being the most expensive. If you decide to use credit counseling as your method to get rid of debt, you will have to pay for the counseling sessions. This is usually a last option for people because it is not often people are willing to spend money in order to get financially stable. The typical person who would qualify for credit counseling is one who is currently struggling to make debt payments, already have some debts in the collection period, and consolidation will not help. There are a variety of sites that can give you access to credit counseling professionals, but before you settle on one, make sure of the following:
- Is the company licensed and have accreditation?
- Does the company have customer reviews? What do they say?
- What are the fees associated with using their credit counseling services?
- Can you trust the company to help you get your finances in order?
In the war between choosing debt consolidation vs. credit counseling, if you decide to use credit counseling, make sure that you can overall trust the company that is helping you. Be honest with your counselor and know that they will be honest with giving you the best help. For a list of certified credit counselors, visit the National Foundation for Credit Counseling site.
When it comes to debt consolidation vs. credit counseling, either method will help you with getting out of debt. It is just a matter of deciding which method is better for you.