Think about appying for a debt consolidation loan. This type of loan is used to pay off all your existing smaller debts and wrap it into one easy to manage loan. In most cases, the payment on that one loan is lower than the payments on all the other items that you consolidated. Here are a few tips for ensuring you get the best deal make the best use of this tool.



First, remember, this does not eliminate your debt. Only you can do that. But a debt consolidation loan can help you reach that goal faster. Shop around for interest rates and terms. Approximately 70% of consumers just take the first deal that comes their way, and the vast majority of those people do not read the fine print. Guess what? That's the fastest way to land in more trouble. Shop and compare, read the disclosures, and never take a deal with a pre-payment penalty.

Consider a credit card balance transfer offer. Used wisely, these can give you a huge step forward in your debt consolidation plan. Again, compare offers and read the fine print. Try to find a 0% offer, but remember that there are almost always balance-transfer fees and sometimes annual fees associated with most deals. Rarely are even 0% offers truly free. Transfer your highest interest balance (or as much of it as you can) first, and then put BOTH cards away—the original card and the balance transfer card. Take them out of your wallet, lock them in the safe deposit box, freeze them in a bowl of water, or cut them up. Under no circumstances use either card, period. You have to change the way you spend, if you keep on spending the way you used to you'll just push yourself further into the debt trap.

Set up automatic payments to the debt consolidation loan or balance transfer card. Make sure the automatic payment covers at least the minimum monthly payment, and will arrive well before the cut-off date. This will ensure you never have a late payment and pay at least the required amount. Send additional payments as often as possible.

Post your debt someplace visible in your home. Yes, you can take it down when company comes, but be sure to post it back up when they leave. This is a way to keep your debt "real". It's all too easy to hide away from debt and pretend it doesn't exist but it will always catch up with you. As you make payments, check the new balance online. Cross out the old (higher) balance, and write in the new (lower) balance. This is a great way to keep giving yourself positive feedback. And it's fun to watch that balance dive like a submarine!

If you make a balance transfer, set a reminder for one month before the end date. When you get to that point, start shopping around for a new balance transfer offer or a low-rate card, and transfer the remaining balance—which is hopefully much smaller!

Balance transfers and debt consolidation loans are tools that can help you manage your debt at a very low cost to you. But those tools have a sharp edge, so use them wisely!