Debt consolidation loans are an excellent way to pay off large amounts of debt from various sources. However, it’s important to be clear on what you should use debt consolidation loans to pay off. If you have multiple credit cards, personal loans, or a few lines of credit, a properly applied consolidation strategy can be a good choice.

After all, making payments on these loans each month can be both stressful and difficult, especially if there are high interest rates and extra fees every time. If you find yourself struggling with too many payments, considering a debt consolidation loan is one of the best solutions.

What Types of Debt Should I Consolidate?

Credit cards often have the highest interest rates, and if you’ve “maxed” out your credit cards, you’ll pay fees on top of those high rates. If you find a debt consolidation loan with a lower interest rate than the average of your credit cards (or most of them), then it’s worthwhile to look into consolidating those obligations into one loan.

On the other hand, there are some important considerations to make before jumping in wholeheartedly to use a debt consolidation loan to pay off your debts. While debt consolidation is significantly helpful toward alleviating the challenges associated with paying off credit card debt, there are a few things to which you’ll need to pay attention in order for the consolidation to run successfully:

  • Changing your spending habits, especially if you’ve overspent a lot in the past, is essential. While debt consolidation can help you with this process, your budget needs to improve to prevent future high debt from accumulating.
  • If you expect debt consolidation to get rid of your high monthly payments, this can often be true, as your consultant will work to get you a fair interest rate and monthly payment. However, if you have other debt that is not included in the consolidation or fail to make timely payments, this could work against your budget.
  • Debt consolidation is part of a larger plan to reduce or eliminate debt. For this reason, if you do not include certain loans or debt within the consolidation, you’ll need to come up with a solid plan to reduce those balances on your own so that you can better manage your finances, and finally, get ahead.

Can I Consolidate Personal Loans or Lines of Credit?

Adding a line of credit or personal loans to your debt consolidation loan is a great idea if you can get a better interest rate. Some financial institutions are willing to work with you to reduce payments, even temporarily, which may be all you need to get back on track. If you find the interest is too high and want to protect your credit rating, including a personal loan or line of credit in your debt consolidation loan can significantly impact the future.

If you think you may qualify for a debt consolidation loan, you can inquire about pre-qualifying for a loan. This can be done online, by phone, or in person. You’ll find lots of helpful tools to manage your debt, too, though debt consolidation is a great tool to help you achieve financial success. Use a debt consolidation loan to pay off your high-interest debt and enjoy a better sense of financial stability in your future.

One more thing, be very careful to avoid racking up new charges while you’re paying off the consolidation loan. Consolidation only moves your debt around, it’s still there and adding new charges to the accounts it cleared will only make maters worse.