It's normal for a debt consolidation agency to charge a service fee. Fees vary according to agencies, but you can expect to pay around 2 and 8 percent of your outstanding balance. This isn't a lot of money if you carry a small amount of debt. But if you owe your creditors thousands upon thousands of dollars, the fee paid to consolidate your debts can quickly soar.

Fortunately, you have options and you don't have to pay a fee to consolidation your debt. While many companies that offer debt consolidation loans require a monthly service fee, plenty of companies do not charge a fee. Free services, such as non-profit debt consolidation companies, will work on your behalf to get your interest rates reduced and lower your monthly payment. Regrettably, free debt consolidation loans are difficult to find and require effort on your part.

Take Your Time and Research

If you conduct an online search for a consolidation agency and pick the first company that you find, you're likely to pay a fee. Terms and conditions vary amongst companies and finding a no fee agency might require more than a quick search. You might have to read up on several different companies and perhaps contact these companies by email or telephone. You can also contact your state department for information on free help.

Talk to Others

Do you know other people who have consolidated their debts with an agency? If so, give them a call and get a referral. Ask about fees and the consolidation process. How long did it take them to pay down the debt? Were they happy with the service?

Learn How the Process Works

It's important to understand that consolidation loans with an agency work differently than bank financing. Consolidation agencies join your different credit accounts and loans into one loan or bill. This alleviates multiple payments each month. Submit one check or money order to the consolidation agency and this payment pays down all of your outstanding debts. Make sure you understand the process fully before signing any paperwork. And if the consolidation company advertises "no fee," get this agreement in writing.

Considerations

Some consolidation agencies have a minimum debt requirement. They might only work with people who have $10,000 or more in credit card debt. Having a small amount of debt can reduce your consolidation options, wherein you may have to work with a fee-based agency. If so, choose a company with care. Shop around first and compare fees and conditions, and check rip off reports or the Better Business Bureau for complaints about the company.

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