Debt consolidation is the solution people automatically tend to think of when facing problem levels of personal debt. At first glance, it makes sense to consolidate various higher-interest balances into one monthly payment at a lower interest rate. It sounds great in theory, but even after consolidating, many people often find themselves slipping deeper into debt and are merely borrowing more money to pay off debt. They’re just “buying time”.
There are essentially three types of borrowing methods available. There are debt-consolidation loans, balance transfers to another credit card, and home equity loans or lines of credit. While any of these methods may help some people get a handle on high interest debts, many others only find temporary relief and are right back where they started. in debt and in need of a real solution for paying it off. According to statistics, 70 percent of Americans who take out a home equity loan or other type of loan to pay off debt end up with the same or higher debt amount within two years.