What are the pros and cons of debt consolidation and is it right for your particular situation? To find out the answer to this question we first need to explore exactly what debt consolidation is, how it works and how it can turn into trouble for you and your credit score. The most common type is credit card consolidation and there are a couple of options for this particular brand of debt consolidation but you can also consolidate other types of debt as well. The goal is to make you debt free so that you can use the money that you earn for things that you want to buy rather than to make interest payments on your credit cards and other loans.

Consolidation loans are the most common – and I think the best – way to reduce or eliminate your credit card debt, as well as other types of debt. Credit consolidation through a company is fine, but a loan allows you to pay off the debts so that you have no interest, no penalties and no late fees, and so that you are making just one monthly payment instead of several, and at a much lower interest rate than you were paying before. Whether you have just a little bit of debt or a whole mountain of it, you can benefit from the debt consolidation loan, but do keep in mind that you usually need to have good credit to quality for it.

Another way to consolidate your credit card debt that is quite similar to the debt consolidation loan is a balance transfer credit card. Balance transfer cards are credit cards that let you charge all of your credit card debt to their card, and then to make payments on the new card. This usually reduces your debt and your monthly payments because the interest is much lower. However, there are a couple of things to keep in mind. One is that sometimes these cards have introductory periods of good interest and then the high interest hits you later. Another thing to keep in mind is that your other credit card companies may charge you fees to do a balance transfer.

If you are comfortable negotiating and talking to creditors then you may be able to consolidate your debt yourself. Simply call up each creditor and explain the situation and see if they will work with you at all. Some creditors have no problem working with you as they will expect that they won’t get paid the full amount anyway if you are struggling, so they may reduce some fees or interest if you ask them to. This can be a great way to reduce your debt and lower your monthly payments, and is fairly easy to do. In fact, this is the job of a debt consolidation company or debt counseling service, which they charge you for, all of which will be explained next.

If you decide that you want to have someone else negotiate with creditors for you, you can get a debt consolidation company to do so, for a fee. These companies charge you money to negotiate with your creditors on your behalf and get everything down into one lower payment. However, the downside to this is that they sometimes use aggressive tactics that creditors don’t like, and once they are informed by the credit consolidation company that you are working with them, the creditor may very well report that information to your credit file, which could hurt your chances for getting credit in the future.