Unfortunately some unethical companies and agents are taking advantage of the fact that so many consumers are in serious financial trouble.  Because of this, the term credit card debt consolidation is being abused, and is now being used to refer to both debt management and debt settlement.  So, you must be sure of what you are getting into before you sign on the dotted line.

Debt management should be considered if you are barely able to make the minimum payment on your credit card account.  If you opt for debt management, your card issuer will close your account and reduce your fees and/or the APR.  This will have a marginally negative impact on your credit.

Debt settlement is a bit more risky.  When you choose credit card debt settlement, you withhold payments from your credit card companies, intentionally defaulting on your account.  Doing this will destroy your credit score, but it’s done with the hope that, at some point your credit card issuers will be willing to settle for much less than what you currently owe them.

Traditionally, credit card debt consolidation means acquiring one loan to pay off all of your other credit card debt.  This is done for two reasons.  First, this new loan will usually have an interest rate that is much lower than the interest rates on your existing credit card accounts.  Secondly, once you consolidate your credit card debt, you only make one payment per month to your new lender, rather than multiple payments to a variety of different credit card issuers.