In theory, consolidating a number of higher-interest loans into one lower-interest loan makes sense. Consolidated loans typically offer lower monthly payments, and making just one payment is simpler.
If you have outstanding credit card balances, student loans, auto payments and mortgages, you may be a candidate for loan consolidation. You have many options from which to choose: taking a personal loan from your bank or credit union, rolling your credit-card balances to a low-rate card, or borrowing against the equity in your home.
There is one huge downside in consolidating your loans, however. If you haven’t solved the problems that put you into debt in the first place, you’ll end up worse off. Surveys confirm that about two-thirds of those who borrow against their home equity to pay off plastic run up more credit card debt within two years. So here’s the big sticking point: couples should not consolidate until they have changed their habits. Do yourself a favor: Hate debt; start paying it off; spend less than you earn. Then, consolidate your loans.