Do yu know I would appreciate feedback on the debt reduction programs offered by organizations like Genus Credit Management and PDS?

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Q. I would appreciate feedback on the debt reduction programs offered by organizations like Genus Credit Management and PDS (Personal Debt Solutions). These orgs are non-profit and have agreements with credit card issuers & banks for lower interest rates for debtors they sign up. To sign up you give all your consumer debt accounts (credit cards, unsecured loans...) to Genus or PDS and they lump them into one payment per month. In my case my monthly payment would go down 23% through Genus. To sign up you must give up all your credit cards, which has implications for renting cars, paying for monthly internet fees, paying for air flights... Debt cards are allowed under the above plans. I would also appreciate feedback on using debt cards.

A. Typically, yes, such organizations ask for and slice up your credit cards, consolidate the debts, and make arrangements for paying outstanding balances with reduced payments or reduced interest rates. You might contact them anyway and ask them if they are willing to work with you even though you have to retain one credit card. If you have a job reason to hold on to a card (e.g., your employer often sends you on business trips), they may still be willing to work with you, but they might not be able to negotiate as good a deal. An alternative is to do your own austerity budgeting, locking up all your charge cards in a safe deposit box, getting a home equity loan to pay off outstanding balances if they are substantial. Ideally, you would then pay off the home equity loan without rebuilding any credit card debt, and when it is paid off, funnel those monthly payments to a savings account so you can build up a contingency fund. You may want to visit your library to see if they have _The Last Investment Guide You'll Ever Need_. It covers budgeting as well as investing and it has several good ideas on saving money. My personal view on charge cards is: they are a nice _payment_ option (cash, check, VISA), but they are a terrible _financing_ option (if at all humanly possible, pay it off every month).

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