Debt Consolidation - Consolidate Your Debts

Debt consolidation is a term that is normally associated with a debt consolidation loan in which you consolidate all of your debts into one loan at a lower interest rate. Debt consolidation can also be used in other debt strategies, for instance debt settlement. For now, we will focus on the advantages and disadvantages of debt consolidation loans.

Advantages of Debt Consolidation

Reduce the interest rate on the debts that you owe. This is simple math, if you are paying less each and every month toward interest on your debts, more of your money can be applied to paying down the principal.
Eliminate future fees on your debt, and even reduce fees on your existing debts. By forming a new plan to handle your debts, you can get your head above water again.
Maintain a good payment history, and build your credit.
Consolidate all of your payments under one creditor. You simplify your life by having to pay one creditor each month.
This strategy can be used on all types of debt, including secured debt.

Disadvantages of Debt Consolidation

In most cases, you will be taking unsecured debt and turning it into secured debt. If you do not make your payments this time, it is not a matter of just dealing with creditor calls; you can lose your house.
Not everyone is able to qualify for a debt consolidation loan.