Although debt consolidation has existed for a number of years, its benefits were reserved for those you were fortunate enough to qualify for private banking.
This soon changed, when financial institutions realised that it would benefit the bank and its many clients to offer debt consolidation loans to all.
Debt Consolidation is simply the process of combing all your debts into one account. This is more manageable and also helps to lower your monthly expenses.
The benefits of debt consolidation loans
The idea behind consolidation loans is to allow you to dig yourself out of debt.
Credit card, person loan and retail card debts are unsecured loans which attract very high interest charges.
Your home loan, which is a secured by the value of your property, has a much lower interest rate.
By using your homeloan to combine your debts into one low interest account you will lower you monthly expenses, and be able to make huge savings in interest payments.
The dangers of debt consolidation
After consolidating their debts many consumers are tempted to apply for even more credit, which leads to greater financial problems.
But, if you are disciplined and determined enough, you can rise out of debt the trap, and start living a life of financial freedom.