Debt consolidation is the process of taking out one large loan to pay off several smaller loans. Instead of paying each month to several creditors, you make one payment on your debt consolidation loan.

Debt consolidation can offer advantages to those trying to get out of debt. If you have a number of small debts and tend to forget or miss payments, then it may be easier to make only one payment a month. You may also be able to get a lower interest rate on your new loan.

Debt Consolidation loans can also be problematic if you don’t do your homework and read the fine print. Some companies charge high upfront fees for their service and others quote unrealistically low monthly payments in order to sell you their loan before raising the interest rate later.

If you do not have bad credit, then more options are available to you for debt consolidation.

Home equity loans are available to homeowners and have, in the past, often been marketed to those interested in a debt consolidation loan. Because the home equity loan functions as a second mortgage secured by your house, it may offer a better interest rate than unsecured debt. However, if you stop paying on your home loan, the bank can then begin the foreclosure process on your home. As you can see, it’s important to have a full understanding of the terms before undergoing debt consolidation

Credit card balance transfer offers have also become a means to consolidate debt. Typically, you use a convenience check or balance transfer offer with a 3% upfront fee and a low interest rate to avoid higher interest rate charges on credit card debt over time with other creditors.

DEBT CONSOLIDATION LINKS

If you have bad credit or are looking for an unsecured debt consolidation loan, you may have to go through a service / company that specializes in debt consolidation. We’ve tracked down two programs which may be able to help you with debt consolidation. Just click on the hyperlinks to learn more.

Debt Consolidation Care - Debt Consolidation Care offers a free no obligation consultation with a credit counselor. They also host a debt discussion forum with 164,000 members.

Finances-Portal.com - Finances Portal connects people interested in debt consolidation with providers. If you have more than $5000 in credit card debt or medical bills and are interested in discussing debt consolidation with a couple professionals, check out their website.