Benefits of consolidating credit card debts

Debt consolidation means taking out a new loan to pay off a number of liabilities and consumer debts, generally unsecured ones.

In effect, multiple debts are combined into a single, larger piece of debt, usually with more favorable pay-off terms: a lower interest rate, lower monthly payment or both.

(In circumstances where you need actual debt relief or don't qualify for loans, it may be best to look into a debt settlement rather than, or in conjunction with, a debt consolidation.

Debt settlement aims to reduce your obligations rather than just reducing the number of creditors.

If you were to pay off each credit card separately, you would be spending 0 per month for 28 months and you would end up paying a total of around ,441.73 in interest.

If you have a good payment history with a bank, credit union or credit card company, asking that institution about a debt consolidation loan should be your first step.This works out to ,371.84 being paid in interest.The monthly savings is 5.21, and over the life of the loan the amount of savings is ,765.04.This amounts to a total savings of ,371.52 (,750 for payments and ,621.52 in interest).Of course, borrowers must have the income and credit worthiness necessary to allow a new lender to offer them at a lower rate.

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