More and more consumers suddenly realize that they have bitten off more than they can chew when it comes to taking on debt.  Considering how easy it is to get a credit card, it is not surprising that many have gone overboard with their credit card spending.  Of course, there are times when an emergency beckons and you simply have no other choice but to put that plastic on the counter.  After all, you and your family have to eat.  Similarly, student loans are becoming more and more necessary, especially in light of rising higher education costs that many a parent is unprepared to pay for. If you find yourself in a quandary with too much debt all around, and perhaps also with skyrocketing interest rates, you may wish to consider a debt consolidation loan that will permit you to pay off all the little debts you have accumulated and consolidate them into one payment that quite often has a much lower interest rate than the original debts.

If you are fortunate enough to have decent credit and if you are employed, you may quite possibly qualify for a personal loan, which you can then use to consolidate your debts. These types of loans come in two flavors: the revolving line of credit and the installment loan.  The installment loan basically will offer you the full amount you are asking for up front, usually by cutting you a check for that amount, and then you will have fixed terms of repayment.  You will know exactly how much money is due each month, what the interest rate is, and how long it will take you to repay the loan.  If you are wise and avoid running up your credit cards again, you will probably be debt free by the time your loan is paid off. 

The other kind of personal loan, the revolving line of credit, is not as cut and dried as the installment loan.  Instead of cutting you a check up front, you will have access to a line of credit, which is rather similar to having another credit card.  Of course, there are pros and cons associated with this kind of debt.  On the one hand, you will have a great freedom to use as much money as you need right now, while not touching any of the other that is part of your line of credit.  On the other hand, the loan will never completely go away if you keep drawing the funds.  To help you make a decision about which loan product is right for you, here is a listing of the pros and cons of a line of credit debt consolidation loan.

Pros

• Only use as much money as you need right then and there.  You are in control of your funds.
• Once you have repaid some or all of the money, it is still available to you in case of an emergency. You will not have to apply for another loan.
• You will be able to pay off your other debts.

Cons

• Your debt never really goes away if you keep drawing from the line of credit.  You will simply perpetuate your indebtedness.
• It is easy to max out the line of credit in addition to your credit cards. In the end, your line of credit would become just another credit card.
• Payments will vary, depending on how much money you have decided to withdraw.
• Interest rates may fluctuate, since usually these loans come with a variable interest rate.

As you can see, there is no “one size fits all” recommendation when it comes to line of credit consolidation loans.  While a line of credit may be the perfect fit for your individual situation, for someone else it might spell financial disaster.  Generally speaking, people who are disciplined in their spending, and desire to have the extra flexibility that a line of credit offers will do great with these loans and experience no repercussions.  For those individuals, however, for whom a line of credit is an open invitation to spend, spend, spend, it is probably a wiser choice to go with the installment loan instead.