Consolidating all of your debt into one monthly bill may seem like a great way to take control of your financial obligations, but we urge you to be very careful. There is a real risk that you could end up going into even deeper debt!
Note the potential consequences of undertaking a Debt Consolidation Loan.
These loans often require you to put your home up as collateral. When a lender loans money to pay off all of your credit cards and other debt, you then have one monthly bill which is a repayment to the lender. Sometimes these loans can have an APR that is higher than your already high credit card interest rate. Even if you do get a low APR, you need to understand that you have now turned your unsecured debt into a secured debt and in the end you will still be paying more than your principal balance because most Debt Consolidation Loans are given in the form of home equity loans. If you get behind on these payments, your home can go into foreclosure. There may be other loan options, but please understand that due to your potentially poor debt-to-income ratio and/or credit rating, you may not be considered for a loan to help you get out of debt and are then left to consider other options.