What is credit card debt consolidation?

• According to All Loan Info, credit card consolidation involves combining balances due to multiple credit card companies and paying them off with one loan.
  
  

Benefits

• One of the benefits of credit card consolidation is a lower interest rate. In addition, unlike credit card loan balances, which continue with no set term, consolidated loans usually have a fixed term and fixed number of months to pay them off, according to the website Credit Loan. Another advantage is you won't receive multiple phone calls if you are late paying multiple credit card companies.
  
  

Alternatives

• One common way to consolidate credit card loans is to use a debt consolidation service. The service pays off all of the credit card companies for you, often negotiates a lower rate, and you only make one payment to the debt consolidation service.
  
  A second method is to take out a home equity loan and pay off the credit cards, according to Lower My Bills. With this approach, you pay off all of your credit card loans at once; however, this changes your financial situation from an unsecured loan to a secured loan. With a secured home equity loan, if you don't pay it, you could risk the loss of your home.
  
  A third approach is to obtain a low-interest personal loan and pay off that one balance.
  
  

Warnings

• If you decide to work with a credit card debt consolidation service, ask about fees. Be cautious about dealing with companies that charge you a percentage of your debt amount, says New Era Debt Solutions. A better approach is to work out a performance-based approach where you pay no fees until the debt is gone. Call the Better Business Bureau to learn if there are any complaints against the company. Ask about the background and experience of your credit counselor. Before you pick a company, get all of its promises in writing.
  
  

Expert Insight

• According to the Federal Trade Commission, you should review your personal budget to get better control of your financial situation, consult a public library or bookstore for helpful information and contact your creditors directly about consolidating your debt. Consider credit counseling as well.