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Debt Consolidation by definition is the combining of all of the debt of a consumer and taking out a loan to pay all of the debt off at a flat, and usually lower interest rate. This is very similar to refinancing a home mortgage.
Debt consolidation can be a transfer from a non-secured loan (not secured again an asset, say a house) to another non-secured loan. However, more often it's a transfer from a non-secured loan to a secured loan. The risk of the bank or lender will become lower, which in turn reduce the interest of the loan.
Credit cards debt is not secured, so when it becomes manageable, it should be consolidated as the rate of interest on credit card debt is usually very high. It is to the debtor’s advantage to shop around and find the best interest rate to consolidate their debt. There are many lenders competing for debtor’s business. When deciding to consolidate debt, there are many tools such as debt consolidation calculators to assist you in choosing which services you will use.
Credit counseling is the act of seeking professional advice from a credit counselor. Credit Counselors use their knowledge of how collection companies and other agencies work to map out a course of action, based on the clients needs. Plans are usually discussed that are optimized to suit the client’s financial needs. Credit counseling services will generally advise you on managing your money, offer solutions to current credit or debt problems, and develop an individualized plan to help you prevent future credit problems. Lower bill payments, lower interest rates, and shorter loan periods can be a result of debt consolidation.
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