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Debt consolidation can help people who are in dire need of financial assistance to help cover their monthly credit card payments. This type of service is usually best suited for those who need to cover large payments each month and have very little left over for basic necessities. Here we will explore all the different options people have when it comes to debt consolidation.

The concept of debt consolidation is a simple one: gather all of the unsecured debt and combine them together with a lower interest rate. This results in a consolidation of your credit card bills so that you only have to pay one monthly payment. The lower interest rate means that you make a lower monthly payment and the debt builds up at a lower rate.

Debt consolidation should be used to consolidate high-interest rate credit cards, payday loans, cash advances, and even unpaid medical bills. There are different options for consolidating debt, including unsecured debt consolidation loans, home equity loans, and debt management programs.

An unsecured consolidation loans allows borrowers to take out a personal loan to repay their debts. This is a viable option only for borrowers with close to perfect credit scores. Borrowers with less-than-perfect credit scores may find that the interest rate in this loans is not sufficient to lower their monthly payments.

Home equity loans allow you to borrow money by putting your home as collateral. While helpful to get a low interest loan, this type of loan can be quite risky if the borrower is still not able to meet the monthly payments. If this were to happen, the home can be taken away from the borrower. Thus, this option should only be chosen if the borrower is 100% ready to make the payments.

A more realistic, less risky option is a debt management program. Under this program, a credit counseling agency consolidates all your debt into one, low monthly payment. The borrower pays the agency monthly, and the agency negotiates a lower interest rate on behalf of the borrower.

If you have low debt, you can opt for a balance transfer. You can transfer the debt from a high-interest credit card to one with a smaller interest rate. Finally, if you're unsure of what action to take, contact a professional financial counselor. They offer free analysis and can get you started in the right direction.

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1. Credit Card Debt Consolidation: an Overview