Debt consolidation is a type of financial planning wherein a person takes a loan from one creditor to pay off several creditors and debts at once. This method is suited for those looking to be debt free and pay only one check a month to the creditor. By consolidating one’s debts one can reduce the overall interest that they are paying and pay off their debt over a period of time. Debt consolidation can help make people debt free if it is part of one’s financial plan and is implemented systematically. Market research has shown that a rising number of Britons are taking out personal loans to consolidate their debts. With the interest rates on personal loans much less when compared to credit cards or unsecured loans, one is able to save a significant sum on interest. Another advantage of personal loan is that the monthly amount to be paid towards the repayment of personal loan is fixed and hence predictable. Unlike a credit card one cannot continue spending money through personal loans.

Market analysts claim that one in three personal loans in the first three months of this year will be taken out towards debt consolidation.  That is roughly 30% of loans taken out. Research has also shown that households are keeping a close watch on their budget and monthly outgoings. Debt consolidation goes a long way towards clearing debt and managing one’s expenses.  The use personal loan for debt consolidation is useful for those who are no longer eligible for the interest free period on credit cards and are likely to pay huge sums towards interest. While shopping around for a personal loan it is advised to look around properly and find a plan that suits one best. There are several low interest schemes in the market, but one should read the offer carefully before deciding to go along with it