Is Debt Consolidation a True Relief?

When consolidating debt, there are several approaches to the process. There are balance transfers to low or zero percent interest credit cards, home equity loans or lines of credit, or debt consolidation loans. Using any of these options can give you an immediate sense of relief from the monthly payments toward that debt.

However, many Americans have found that once they pay off those loans into one single loan, they have just opened up the lines of credit to themselves once again. Many find themselves back with the same high balances on their credit cards again, only to now be in a much worse position than they were before.

Not only are they now further in debt than they were when they made the first initial consolidation, but they now have maxed themselves out of the market for the lower interest rates because of their high debt to income ratio. The most important thing to remember when consolidating debt is that you are consolidating, not paying it off, and you would be wise to destroy any cards, etc. that you are likely to run up again at least until you pay off your new loan.  ■