Credit industry specialists are warning American cardholders against relying too much on quick fix solutions offered by credit consultants, counseling, consolidation, and credit repair companies. Analysts have noted a substantial increase in the amount of advertisements and aggressive marketing strategies employed by many companies who claim to provide solutions for credit debts.
These companies have been existing as long as there have been cardholders looking for ways to reduce their mounting credit debts, expert say. While most of these companies offer genuine services complete with legal advisers and financial experts, some are just cashing in on the increasing demand for credit debt reduction, says analysts.
The abundance of these companies is also causing intense competition among them, resulting in more marketing gimmicks and faulty advertising. All these, experts say, are the companies' attempts to get their piece of the pie, sometimes by deceiving cardholders and gaining their trusts. Analysts have seen an alarming increase in TV, radio, and even newspaper ads paid for by credit debt reduction companies. Industry sources warn that these companies may not really live up to the promises featured in their ads. On the contrary, they add, these same companies can even add more to the financial worries of many debt-ridden Americans.
Some scam artists and credit card thieves are also making use of these companies to collect relevant and important credit data from unsuspecting victims. By posing as representatives of bogus debt reduction companies, scam artists can collect crucial personal data from cardholders, giving them instant access to their victims' cards.
Recent studies have suggested that credit card fraud is one of the major source of the credit industry's losses. Federal government officials have also cited credit fraud as having deprived card companies some $40 billion in revenues this year alone. Most of the scam artists and card thieves get away with their crime, with only five percent of all suspected criminals convicted and sent to jail.
Financial experts say that the best solution to credit card debt is never quick fix or easy. They explain that proper usage and responsible credit card use is essential for any cardholder to have better control of his or her credit card. If consumers do decide to employ the services of debt reduction companies, they need to research the company and find out if they are legitimate. Analysts say that while there are legitimate and reputable credit counseling companies, proper research and precaution is still important to avoid more financial problems.