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A third factor is that you don’t trade fixed-rate debt for variable-rate debt.

While a variable rate loan can look very enticing because of its low interest rate, there is a risk with this type of loan.

The interest rate could start low but then increase over time so much to the point where you end up paying more on your debt each month than you did on the debts you consolidated.

One of the problems with debt consolidation loans is that too many people consolidate their debts then get deeply in debt all over again because they’re just poor money managers and have spending problems.For these kind of people, a debt consolidation loan can be a very dangerous, no-win proposition.Options for debt consolidation There are several ways to achieve debt relief in addition to debt consolidation loans.Whether we like to admit it or not we have become a nation of debt junkies.A report issued earlier this year by the US government was that the average credit card debt per household in the United States is ,607. In either event, you would use the money to pay off all of your other debts.

US households also have an average of ,656 in student loan debt and an average of 3,500 in mortgage debt. If your debts have spun out of control and you’re looking for some relief, there is a simple solution. This would leave you with just one monthly payment to make each month, which should be much less than the sum of the payments you’re currently making.How to know if consolidation loans make sense Before you rush off to your bank or credit union for a debt consolidation loan there are some things you need to know in order to understand whether it makes sense.The first of these is that the interest rate on your debt consolidation loan should be lower than the rates of the debts you’re consolidating.If you have three credit cards with interest rates of 22%, 20% and 18% your interest rate would be 20%.If you were to transfer the balances on those three cards to a new one with an interest rate of 15% or get a debt consolidation bank loan at 10% and use it to pay off your credit cards, you would definitely improve your situation.A second factor is to make sure you would reduce the total amount of money you have to pay on your debt each month.