Credit card debt is a major issue in the UK.  Millions of people are owing large sums of money on their credit cards, over £65 billion at last count.  With the unstable economic conditions forcing many people out of work this figure is only set to rise as more people become dependent on lines of credit.

But credit is rarely the answer long term.  With high interest rates meaning that you end up paying back way more than you borrowed in the first place it is far from an ideal situation.  When you combine that with the number of credit cards many people have (67 million cards currently in the UK) you realize just how much of an issue credit card debt is to the UK economy.

So what is consolidating credit card debt?

Debt consolidation is a practice that is finding favor with many people who are tied into large amounts of credit, whether through credit cards, loans, car financing etc.  You take out a specialist debt consolidation loan and use that money to pay off all your other forms of debt.

What this does is funnel everything into one monthly payment to one company, rather than spreading it around numerous companies each with a small monthly payment that add up to a far higher total.  The single monthly payment is usually considerably smaller than the total being paid out to meet debt before, freeing up cash for people in their monthly budgets and allowing them to enjoy a better life style.

This sort of debt consolidation can be a great help to people who are worried about meeting their monthly payments on the number of cards and loans they have.  It can help stop legal issues and ensure that you are able to meet payments that you might not have otherwise because your finances were spread too thinly.

What to look for when consolidating card debt

There are a large number of companies now looking to give consolidation loans, and you can use this to your advantage.  Shop around and make sure you get the best deal for yourself.  But make sure any deal covers these two important points.

• Low APR.  APR (Annual Percentage Rate) is the interest that you are paying on your loan, the lower the APR the lower your interest cost, the better off financially you are.  Shop around, there are lots of companies offering debt consolidation loans, make sure you get the best deal.
• Get out clauses.  You want to be able to buy yourself out of the contract without any penalties should something unforeseen arise.  Make sure that your agreement has a get out clause.