Credit card debt consolidation services charge fees. Even the "non-profit" companies charge fees, so don't be mislead into thinking the non-profit ones are free. The important thing is to find out up front exactly what types of fees you will be charged, and how much those fees will be.
Unfortunately, if you choose to deal with a "less-than-upfront" company to help in your debt reduction plan, you may actually do yourself more harm than good, getting yourself further behind in your payments and damaging your credit rating.
This is an all-too-common situation.
Someone like yourself signs up with a credit card debt consolidation services company, thinking that you are finally taking a positive step towards ending your debt problems. You make your first payment to the debt consolidator so that they in turn can make the new monthly payments to your creditors. Much to your surprise, you find out at a later date that in fact the debt consolidation service actually kept that first months payment themselves as a fee! Now you have missed another payment with your creditors, you are no further ahead (in fact you're further behind) in paying off your debts, and your credit score just took another hit.
The moral of this story?
Make sure that before you sign on with a debt consolidation service that you understand completely what fees will be involved, how much they will be and when and how they will be charged. I'm sure you don't need anymore surprises in your life so ask up front and get everything in writing.
Of course, reputable debt counseling companies will not try and pull
these shenanigans (what a great word). They will be up front with you
the beginning with regards to fees and charges, and perhaps more
importantly, up front with you in their assessment of whether or not
you even need to be in a debt consolidation program.
1. Upfront Fees - Most debt consolidation/credit counseling companies charge an upfront fee that covers the cost of your initial consultation and the setting up of your personal debt management plan. Once your counselor and you have determined a plan, and calculated a monthly payment amount that fits your budget, the upfront fee will typically be based on a percentage of the amount of that monthly payment.
2. Ongoing Fees - Each month that you remain in the debt management program you will be charged a fee. Again, this fee can be a percentage of your payment amount, or a flat fee depending on the company.
I highly recommend that you compare at least three separate debt consolidation counseling companies, finding out exactly what they will do for you, and what fees are involved, before you commit yourself. Remember, most debt relief programs of this type require 3-5 years before your debts are paid off in full. (There are no overnight miracles, sorry.) So before you team up with a credit card debt counseling company make sure you do your homework.