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Most Americans today are struggling with debt in some form or other, with the most common – and expensive – culprit being their credit cards. With interest rates of 15-25% or more, it’s no wonder that many people are looking for ways to pay down the credit cards as quickly as possible. But getting out of debt is easier said than done. For many people, their monthly credit card payments are simply too high for them to keep up with, and that’s where debt consolidation might be able to help.

What Is Debt Consolidation?

Debt consolidation is simply a method of taking all of your debts and combining them under a single payment plan – usually at a reduced interest rate. If your current income is not quite enough to cover all your monthly payments, then a program like this might be able to help you cover those payments and start catching up.

But debt consolidation is not a magic bullet.

Will Debt Consolidation Help You?

Finance experts estimate that 70% or more of people who use debt consolidation programs end up owing the same amount of money or more within a few years. How does this happen? The problem isn’t that debt consolidation plans don’t work. The problem is that people don’t make any changes in their spending habits, and they never address the problems that lead to their debt in the first place.

If you’re struggling under a load of credit card debt, it’s important that you take a long, hard look at the behaviors that lead to all that debt piling up. Was there an unusual financial hardship that caused your expenses to become greater than your income, or did the debt pile up gradually due to making poor spending decisions on a daily, weekly or monthly basis?

In many cases, the underlying problem is chronic debt spending. If you’re using your credit cards for daily purchases, then that is probably the reason you are in trouble, and that is where you need to focus your attention.

To get out of debt, you must spend less money than you earn every single month. So if your monthly expenses are greater than your monthly income, then you need to make some serious lifestyle changes. There isn’t a debt counseling plan on the planet that will magically get you out of debt if you’re continuing to spend more money than you earn.

So be honest about the causes of your debt, and make the lifestyle changes you need to make to pay down your debt for good.

If you’ve made the decision to address the root causes of your debt, then debt consolidation can work for you. Here are three ways that can happen.

  1. Organizes Your Debts Into A Single Monthly Payment

The first benefit of a debt consolidation program is that it streamlines your debt payments so that you just make a single payment every month. If you often find yourself forgetting to send out all your credit card payments on time – which needlessly leads to late fees – then this alone can help you save money, time and frustration, as sending out one payment a month is a lot simpler than juggling five, ten or twenty different bills.

  1. Lower Interest Rates

In most cases, debt consolidation companies are able to negotiate with your various creditors to get you a lower overall interest rate. In some cases, they might even be able to cut your interest rates in half! In theory, this sounds like it will save you a lot of money, and sometimes it really does. But the flip side is that your payment terms might get extended, meaning that it will take you longer to pay off those bills, so sometimes the lower interest rates are washed out by the extended payment schedules.

  1. Reduced Monthly Payments

The greatest way that debt consolidation can help you is by lowering your monthly payment. If you aren’t making enough to cover all your credit card bills, then this is probably the greatest benefit for you and allow you to stop wasting money on late fees due to non-payment.