If you carry a balance on several credit cards at a high interest rate, one way you can make your monthly payments lower is by debt consolidation. What this means is that a company will carry your debt for you, and you will make one payment, usually at a lower interest rate, to that company instead. Sometimes the company can negotiate with your lenders to get them to lower your balances. Many times, consolidating debt can be a road out of endless rising interest rates, over limit fees and the like.

There can be a catch, however. If you do this, and then immediately take on additional debt, through credit cards, car loans or whatever, you will quickly find yourself in a deeper financial hole than you were to begin with. So if you are considering debt consolidation, you’ll want to make sure that you are one hundred percent committed to reducing your debt, and you can’t do that if you take on even a tiny bit of additional debt during this process.

One of the biggest reasons I can see for going with a debt consolidation company is that often, the credit card companies don’t negotiate as well with individuals as they do with companies. At least, this has been my experience. I think once you decide to consolidate your debts, the credit card companies know you are serious about not dealing with them anymore and negotiate more seriously with the company representing your interests.

Of course, you’ll want to make sure that the company is, in fact, representing your interests. Make sure that you get everything in writing and read the fine print. You should get a more favorable interest rate than you had with the credit cards. Also, do the math. Figure out how much you will be paying off over the period the loan covers and make sure that it’s not more than you already owe!

Getting out of debt requires serious discipline and considerable good judgment.