Debt consolidation is often seen as the ideal way to pay the suffocating debt. The consolidation done by combining your balances into a single loan with a lower interest rate than what you paid so far. Debt consolidation is usually done with the help of a third party to negotiate directly with the lender. Once approval is received, then you will pay the monthly installment to the debt consolidation company, of course, with a lower interest rate. This method is favored by many people to prevent them from falling into bankruptcy situation.

Personal Loan

Personal loan is what usually thought by people when they talk about debt settlement. It is one of the ideal solution to get a new loan at a low interest rate and the loan can be a great strategy as long as you can find what you need, otherwise this could be something that makes it difficult when you have a small credit with high interest rates, for example if you have a credit card balance approaching the limitation prescribed (for you). This situation will make it difficult for you to get new credit.

Most personal loans are always executed with a fixed payment period, so it is important for you to know in detail how much liability you must meet until you are declared free of debt. You must avoid the risk of trapped in minimum payments and debt stretching that normally can last for several years.

Checking credit score

This is an important thing to do. By checking your credit score then you can know exactly where you are and of course you can find out how much your ability to meet a variety of options. You should be aware that it is futile if you apply for a loan with terms that are difficult to fulfill. Instead of helping you solve your credit problems, this is precisely the error that can plunge you into a new larger debt trap.

Looking for a debt consolidation company

Once you’re ready to do a debt consolidation then you should immediately look for a service that can help you in negotiating with your credit card company. You may have received many emails from various debt consolidation companies that offer their services to change some of your debts into one loan with a lower interest rate. You need to check the validity of their services by matching a variety of information on search engine. You can also use the conventional way, namely by seeking information from family and friends who may have done debt consolidation. Remember that experience is the best teacher and the experience of others can be a teacher for you.


You may be getting a new mortgage with a much lower interest rate but you need to take into account about the transfer fee. In general, the transfer fees charged ranging between 2-4% of the total money transferred. And you have to be aware of the changes in interest rates because in some cases, new loans offer interest rates ranging from 0-4% that will suddenly be jumping after 18 months.