The term "credit card debt consolidation loan" can cover a number of different ways of tackling your credit cards and their balances.
Many credit card debt consolidation loans have been sold to consumers in the past without any advice on budgetting or closing down old credit card accounts, which has lead to an increase - not reduction! - in people's debts.
You will need to approach a consolidation loan with a good understanding of your current financial situation and a well planned budget, otherwise you may find yourself needing another consolidation loan in a year's time.
As with all financial problems, the first stage is planning - go through your list of credit cards and decide which ones you need to pay off, then resolve to follow through by cancelling the accounts and destroying the cards.
If all you are doing is transferring the balance to this credit card debt consolidation loan then there are other ways to do that which make about as much sense as a credit card debt consolidation loan but still allow you to spend on your cards.
You will need to destroy your cards and cancel the accounts once this loan has paid off the balances, otherwise your financial situation will be worse than it was before.
Choose one good credit card with cashback or other loyalty scheme for your daily needs, and then use the loan to pay off your remaining cards - this can be the quickest way to kickstart your debt reduction program.
If you don't want to destroy your cards then you can use a balance transfer deal to move your outstanding debt to a new credit card at a much lower rate of interest.
You will get offers in the mail that tell you to transfer your credit card debt to this new card and you won't pay any interest on the balance you transfer.
By taking advantage of these deals you can reduce your monthly repayments, as the balance transfer will come with a much lower interest rate.
A word of warning - balance transfers need to be managed carefully, so that you aren't caught out when the introductory rate period expires and the monthly repayments take a sudden hike.
Balance transfer deals need to be managed with great care if you're not to end up with a large outstanding balance when the introductory interest rate expires - talk to a professional credit counsellor if you have concerns about the deal.
With a credit card debt consolidation loan, it's important to remember it is one factor in reducing your credit card debt.
Are you ready to cut up your credit cards? Good - then you're well on your way to escaping the financial hole of credit card debt.
