The process of debt consolidation is in reality quite simple.
A consumer is overwhelmed by the numerous bills that accumulate.
What is usually done is that all the loan amounts are merged into one and the amount is paid with a lower rate of interest.
Almost all credit cards charge an exorbitant 20% interest especially for the department store credit card though some other types of loan charge even more.
But do not lose heart because if your debt consists entirely of credit card then opting for a debt consolidation loan would be a good idea.
The problem lies with those who have an insufficient income.
They tend to pay the least amount possible thereby merely clearing a part of the interest and so the principle is left untouched month after month.
When you have decided to consolidate your debts these high interests are eliminated and all the payments are merged into one and paid off with an affordable interest rate.
Low interest rates helps to pay back the principle faster, repairs you credit and also satisfies your creditors.
Credit card debt consolidation is considered to be an extremely lucrative business nowadays.
You have to remember that not all Credit card debt consolidation schemes are similar.
It depends on the amount of debt you are in.
For the last few decades most finance service companies and banks have offered home equity loans as the best possible option for consolidating credit card debts.
But financial experts have expressed their concern in this matter.
They have said that though home equity loan is tax advantaged it should not be accepted without weighing the problems that are associated with it.
A default on the credit card balance may impair your credit repair but if by chance you default on your home equity you might lose your home.
If you need to consolidate your credit card debt it would be a good idea to see the credit cards that offer 0% balance transfer or have low rates of interest.
This form of debt consolidation can save quite a few hundred dollars per month.
You might have feel loyal towards the credit card that you have owned for years.
But if you find that the issuer is charging high rates of interest you should stop immediately.
There are many more credit card issuers in the market who offer low or even 0% balance transfer features, which you can choose.
Thus being debt free is to get low payments and to refinance the interest balances that are very high.
Debt consolidation is not a solution by itself but it is just a way to gain financial freedom.