Debt consolidation eases the burden of multiple high-interest loans or credit card debt.

Low interest rates make debt consolidation an attractive option.

Debt consolidation is not just a convenient thing to do. It is a responsible thing to do. Americans have run up so much debt in the last 15 years that many families cannot pay the money back. Debt consolidation enables the borrower to combine the various loans and charges into a single, convenient monthly payment.

Because of the inclusion of so many high-interest loans in the debt total, debt consolidation can dramatically reduce the interest rates associated with the debt. With the extremely low interest rates currently, it is not unusual to see credit cards with 18-22% interest rates being reduced to loans carrying interest rates below 6% because of debt consolidation.

Debt consolidation can dramatically reduce the monthly payment associated with the consolidated debt. Low interest rates are one factor and, depending on the type of debt consolidation loan received, the length of the loan is another factor. For example, debt consolidation may take the form of a mortgage refinance. Instead of refinancing just the balance of the existing loan, additional debt is included in the financed amount. You may refinance a $100,000 mortgage and add $15,000 from the different debts you have incurred. That $15,000 is the spread over the length of the new mortgage, up to 30 years.

Of course, debt consolidation is pointless if you are only going to run up more high-interest debt. The elimination of debt through debt consolidation can create a false sense of financial security. If your goal is to become debt free then some basic financial disciplines must be established such as establishing, and adhering to, a budget. Debt consolidation should not become a habit. It should be a responsible strategy to gain financial stability.

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