Debt consolidation - the process of combining all outstanding debts in one loan account. For example, you may have an existing loan with a balance of £2,500, a credit card balance of £1,000 and a store card balance of £500. These could all be consolidated into one loan of £4,000. The purpose is usually to lower monthly repayments, through either lower interest rates on the new loan, or lower repayments from an extended repayment term, or both.
Debt consolidation is most useful for people with a number of high-interest loans. These may include credit cards or other high-interest loans/bills; basically any debt with 15% or higher interest is a prime candidate for lower rates. A debt consolidation service can combine all these high-interest loans and allow you to make just one convenient monthly payment that could be as low as half of your current obligations
