The compounding of all your debts into a single debt is known as debt consolidation. However, debt consolidation is not available for all types of loans. Debt consolidation is predominantly used to settle the credit card dues that arise from different credit card bills.
The debt consolidation is useful in many ways. One of the best uses is that it lowers the interest rate to a great extent. This is possible because all the debts will be consolidated into a single debt.
Moreover, the debtor need not worry about paying interest to several credit companies because after debt consolidation their main concern will hover around a single interest rate. In simple terms, a number of unsecured loans can be brought under a single umbrella.
The debt consolidations for credit card bills are advised because the interest rate charged for credit card payments are higher. Apart from credit card bills, the debt consolidation is available to settle medical bills, pay off student loans and the like.
Bringing all the debts together, therefore, not only works out cheaper, but also makes it manageable to the debtors.
If a number of credit card payments are bothering you, then it is the right time to go in for debt consolidation.