This week we begin a series on debt consolidation loans. A debt consolidation loan is a loan you get to repay other loans. The most common example would be getting a loan or line of credit from your bank at a 6% interest rate to repay the outstanding balances on your credit cards that carry a 20% interest rate. Your total debt remains the same, but you are paying less in interest, so you can repay your debts faster.
Today’s tip: A debt consolidation loan does not reduce your debt, it just replaces one type of debt with another type of debt, so consider your options carefully before getting a debt consolidation loan. Use our debt options calculator to examine your options before getting a consolidation loan.
