One of the most important things that you can come to understand regarding your debt and the concept of debt consolidation is this: You absolutely cannot borrow your way out of debt, in order to solve all of your problems. More than 80 percent of all individuals that managed to bring their current accounts down to a 0 balance did so using a debt consolidation loan, however, these individuals ended up owing even more money to the second lender because interest rates ended up hurting them worse than they imagined.
Most consumers are so excited about the prospect of paring down or completely paying off their debts that they gave very little consideration if any to what consequences would exist for the new loan, the debt consolidation loan. Many times these individuals end up owing as much as 50% more to the new lender than they owed for their original debt, which means that this really is not helping the problem in any way.
Unfortunately, this really is not even the worst of it. Countless people are taking debt consolidation loans out as a means of paying off their credit cards. They make the mistake of keeping these credit cards open without doing anything to change their spending habits. Because they do not do anything to fix their spending habits, they end up re-maxing these credit cards out so that they are now tackling credit card debt that is mounting quickly, and the high-interest debt consolidation loan that they used to initially pay off the credit cards in the first place.
By the time something like this happens, the consumer has simply come full circle because they are now paying the debt consolidation loan payments and their credit card payments. It really cannot get worse than this, right? You have effectively doubled or tripled your debt in the process of trying to get out of debt, which is completely worthless.
The individuals who do find success with debt consolidation loans are those who have a stable plan in place before they ever actually take the loan out. Not only this, but they are also the individuals capable of following the plan to the letter, never straying no matter what it costs. If you want to succeed with debt consolidation, then you need to understand what it means to take out and pay off a debt consolidation loan. If you do not think that you have what it takes to pay off a loan designated for paying off your other debts, because most of these loans have higher fees and higher interest rates, then, by all means, find another method of paring down your debt. Paying off debt is not easy, no matter which way you do it. Debt consolidation loans may be a solution for some, but they are not the answer for everyone because they create more debt rather than getting you out of debt completely. If you have the will power and the income to trade old debt for new debt, and can pay the new debt off before the interest rates get you, then debt consolidation may be the answer. Otherwise, choose a different solution to get you out of debt.