Your choices for debt consolidation depend on whether or not you currently own a home.If you have several credit card accounts with a balance, you could benefit from consolidating your debt by reducing your interest rate and having only one bill to pay.No one likes to have credit card debt, but plenty of consumers have accumulated too much of it over time.
While consumers can use techniques such as the “snowball method” (paying off your lowest balance in full while paying the minimum on other credit cards, then tackling the next debt with as high a payment as you can handle), the concept of debt consolidation for one overall payment is appealing.
Even if you sell your home, you’ve reduced the profit you can make from the sale by the amount of debt you’ve now included in your mortgage.
If you do opt for debt consolidation, it’s extremely important to be disciplined so you pay off the new loan as quickly as possible and avoid getting into debt again.
High interest debt on credit cards, auto loans, or other consumer loans can be difficult to pay off and may create a barrier to your financial goals.
However, if you're a homeowner, you have additional options to help you manage your debt, including a debt consolidation mortgage and home equity loan or line of credit.
That way you can easily budget with a structured payment plan and an assured pay-off date.