Hello Minnie,
I usually use the term "financial suicide" for consolidation loans however as Andy says if you are confident that you would cut up those credit cards, perhaps you could consider it.
If you end up with one payment a month and all your outstanding credit card balances paid off, it may be tempting to start using these cards again and then get further into debt.
As these loans are essentially second mortgages over a long term, it will take you longer to be debt free.
Even as the interest rate is less, because the term of the loan is over such a long period, you may end up spending more in repayments.
Perhaps the most important point you must consider before taking out a debt consolidation loan, remember that the loan is secured on your home and if you do not keep up with repayments, you could lose your home.
So although debt consolidation may sound like a great idea, it may not be for everyone.
So the advice is to carry out thorough research (speak to atleast 2 more companies) before making a decision and ensure the interest rate you get for your debt consolidation is the best for you.
Kind regards,
Julia Simavi
Shortlisted with special commendation for Debt Counsellor of the Year by Credit Today Awards 2007
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