This means you only pay one payment per month rather than a number of payments at different times throughout the month.

Things to consider when consolidating debt

If you are considering debt consolidation, you must first work out how much you can reasonably afford to pay each month. You must budget enough every month to cover all your needs as you should not use anymore credit until you pay the debt consolidation loan in full. If you are in arrears with your current creditors, your credit rating is likely to have been affected. This may mean that you’re unable to obtain further loan at good rate of interest.

It is important that you understand how much you will pay for the loan in full. If you extend the loan over a longer term than your original debts you will be paying more in interest and so increasing the amount of debt you have.

We recommend that you do not consolidate your unsecured debts - such as credit card debt or personal loans - by taking out a secured loan, which will secure the debts against your house. This means that if you fall behind with the payments in the future, you risk repossession of your property.

Debt consolidation can be risky and could leave you in a worse financial situation than the one you are in at the moment. Make sure you get professional debt advice to see if there is a better debt solution for you.