There are plenty of debt consolidation services out there ready to help you consolidate your debts and help you getting out of your debt, but those require you to pay some amount of fee. There are also debt programs from the Government that can help you, but these programs are usually requiring you to meet a certain criteria before your application is accepted.

Here’s the good news – you can consolidate your own debts. You need to know the options and how to choose the most applicable to your debt situation.

If you are a home owner

Your best option would be to take a home equity loan against your home. You can usually do this without taking any mortgages. A home equity loan offers you the lowest interest rate and the most laid back payment method, and usually consisting of a fixed amount to be paid over a fixed period of time. The thing to look out for in home equity loan is the variable interest rate and the risk of losing your home if you fail to pay the loan.

If you have a good credit rating

You can get lower interest rates from credit card issuers, thanks to your good credit rating. Since credit card issuers favor you over those with lower credit rating (more “risky” to them,) you should also request for a fixed rate and a waive on transfer fees related to transferring your credit balances. This way, you can consider using your credit cards to consolidate your debt.

If you are a life insurance policy holder

You can actually borrow from your policy to help you solve your debt problems. You don’t need to repay this loan as the insurance company will reduce your benefits according to the amount you have borrowed. Unfortunately, the insurance companies will charge you a premium interest rate for this. Since there are some differences in policies for this kind of loan, you need to consult your insurance agent before deciding on anything.

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1. Debt Consolidation – When Should I Consolidate My Debts?