Wed, 20 Jul 2005

  Credit Councelors

 What is the story with these services? It seems every week there is a new one popping up. They claim to be non profit but are they? If they are non profit why are there so many new services? Are they doing it out of the kindness in their hearts? I doubt that is the case.

  I understand how they can help you. They talk to your creditors and get them to reduce your interest. That is something you can do yourself. If you call the credit card companies they are willing to work with you. One thing they can do for you is sell you books or videos that show you how to manage your money and rebuild your credit. Hey wait this is a non profit group they must be selling me their pproduct at cost. If they sold it to me at a profilt they would no longer be non profit. I bet the money they make is to cover administrative costs. They would never try to take advantage of someone who is struggling with financial problems.

 Here is something they don't tell you. They will arrange to have your interest rates lowered but you still have to call the credit card companies to have your due date changed. The so called councelors take your money then distribute it to your creditors. It is up to you to set up your payment dues dates to all be the same. So if you are trying to pay off four credit cards, all four must have a payment due date in the same time frame. If you don't do this you can still be hit with late charges. So if the councelors make your payments at the end of the month but your due date is in the beginning of the month you will be hit with late fees.

 Here is something else interesting. You must give them your bank account info so they can remove funds to make your payments. Now lets say they will make your payments on the fifteenth of the month. They may take the money out of your account as early as the first of the month. What happens to your money betweent the time they take it and the time they dispurse it? Well it sits in an account collecting interest. What happens to that interest? Do they give to you? I doubt that. I know the employees need to be paid but I am willing to bet that the interest they make is higher than the salaries they have to pay. I am also willing to bet that there is some sort of loop hole in the laws allows the non profit group to keep the interest money without having to claim it as a profit from the counceling service.

 The next time you see a tv ad showing all these happy people praising the councleing service, think of how those tv ads were paid for. When the ad shows these happy councelors helping people lower their payments think about why they are happy. I don't think they are happy about doing their good deed for the day.

  I guess what I am trying to say is that the credit councelors can help you but they are not doing it for free like they lead you to believe. You may not be paying them directly but they are making money from you. According to the laws they are non profit but they are making a profit.

posted at: 11:46 | path: | permanent link to this entry