How It Works

• A credit card debt consolidation service will take an agreed upon monthly payment amount and disperse the funds to the credit card companies you owe. Many credit card debt consolidation services will charge a fee that is included in your monthly payment. You should receive statements from the debt consolidation service showing the amount of debt you have consolidated, how much you pay monthly and when your debt will be paid in full.
  
  

Who Needs It

• Credit card debt consolidation may be a useful tool if you find yourself unable to pay all your monthly credit card bills. A person who receives collection calls, is able to pay only the minimum amount due on credit card bills, has exceeded credit card limits or has to skip payments may need the services of a credit card debt consolidation program. Debt consolidation services should be tried as a payment option before you consider filing for bankruptcy.
  
  

Finding the Right Service

• Credit card debt consolidation services can charge high interest rates and fees. Before deciding on a service, check with the Better Business Bureau to see if a credit card debt consolidation program is reputable. Make sure the company offers a written agreement explaining the services they will be providing. The company should have a contact you can speak with at any time and provide an address and telephone number. Beware of companies where your first month's payment covers only the agency fees.
  
  

Legislation

• Since the beginning of the recession in 2007, the Better Business Bureau reports having received more than 6,000 complaints against debt settlement companies. The Federal Trade Commission has regulations in place to protect consumers from deception debt relief practices. A credit card debt consolidation service is not allowed to charge fees until it has successfully renegotiated, reduced or settled at least one of the consumer's debts. The company also cannot charge a fee until they have provided a written agreement between the creditor and the consumer and at least one payment to the creditor has been made.