Are you wondering what a collection agency is? From time to time, you may get a call from an agency that is asking you pay past dues for one thing or another. There are many different types of collection agencies. For instance, if you default on your credit cards, the creditor will likely reach out to you to recoup what you owe.
If they are unable to successfully get what they are owed, that is when they reach out to a third party, in this case, a collection agency. Continue watching this video to learn more.
When collection agencies reach out, they do so on behalf of their client. For example, if you owe money on your Citi credit card, the agency will act as if they are part of Citi’s staff. Collection agencies typically make money off of commissions that are given when they successfully collect their clients’ debts. Agencies can also purchase debts. This can be at a discount, depending on the risk of the bad debt.