Consolidating debt home equity line
Consumers can use debt consolidation as a tool to deal with student loan debt, credit card debt and other types of debt.
There are several ways consumers can lump debts into a single payment.
Even so, the interest rates are still typically less than the rates on credit cards. “Typically, the loan has to be paid off in three to five years,” says Harrine Freeman, CEO and owner of H. Freeman Enterprises, a credit repair and credit-counseling service in Bethesda, Md., and author of “How to Get Out of Debt.” These types of loans don’t erase the debt; they simply transfer all your debts to a different lender or type of loan.Even if the monthly payment stays the same, you can still come out ahead by streamlining your loans.Say that you currently have three credit cards that charge a 28% APR; they are maxed out at ,000 each and you're spending 0 a month on each card's minimum payment.These loans are usually offered by financial institutions, such as banks and credit unions; there are also specialized debt-consolidation service companies.There are two broad types of debt consolidation loans: secured and unsecured.