But it has been normally observed that most of business and well off people prefer to make purchases and shopping through credit cards even when they have money in hand.
This practice is usually beneficial for the company, but in the long run its not a good option for the consumer.
When you are well off and you have enough money to pay back the debt with interest on it, then its not a big deal; but what if you get some loss in your business and you are empty handed to return the loans which you have taken from the banks or credit card companies.
This is the worst time for the credit card consumer, because the interest rate goes high and high with each due date, and if you are unable to pay the money on time, you would most probably end up with the interest amount almost same as that of the due amount.
Almost all the world has been affected by the economic downfall, and the banks and creditors even faced worst scenarios as most of the debtors were not paying back the money which they were granted, and hence the company was under heavy loss.
This situation has enforced them to find out some way to get back the money from the consumer.
Of course they could have filed the cases on the consumers who were not paying back their loans, but in turn there was no benefit, because it would not only waste the time of the creditor but also the company may end up getting nothing in hand.
This was the time when debt relief service providers facilitated the consumers and the creditors to negotiate to find out some mid way to solve the problem.
In debt settlement process, creditors agree to reduce the interest rates and sometimes to eliminate those for the next due payments.
This is good for the company, because at least they would not lose all of their money.
On behalf of the debtor, its a sigh of relief as he can now easily make the reduced payments without being under the stress of interest rates on next due payments.
For this the consumer has to pay service charges to the settlement provider.