Consolidating debt can be the best way to finally take control of your finances and get back on the road towards fiscal stability. When most people think of consolidating debt, they immediately think of credit card debt consolidation. But did you know that consolidating debt works for all types of loans? In order to decide what types of loans, it’s best to consider the types of loans and whether they are particularly suited to consolidating debt.

Consolidating Debt from Credit Cards

As mentioned before, credit cards are the most commonly consolidated debt. This is because most credit cards began with very favorable rates but are highly susceptible to adjustment. For example, a credit card may begin with 0% APR, but after 6 months, that interest rate can skyrocket to as much as 27%, depending on your credit rating. To make matters worse, if you have a single late payment, it can shoot up even further. Once this happens, you are stuck with a card that you thought had a low interest rate but is actually costing you thousands of dollars. Consolidating debt from credit cards can help you escape these traps.

Consolidating Debt from Home Equity

Home mortgages often have the lowest interest rates you’ll find. But some homeowners sometimes choose to take out a home equity line of credit when times get tough. If a home mortgage loan is an adjustable rate,  it can quickly become very, very high with very little notice. Consolidating debt can also help you combat increasing adjustable rate mortgage and home equity line of credit interest rates.

Consolidating Debt from Installment Loans

Installment loans, unlike revolving credit, is often relatively stable. Auto loan payments won’t change from month to month. However, if your credit score has changed or interest rates have been cut since getting your auto loan, it may be advantageous to refinance. Consolidating debt from auto loans is one way to refinance for a better rate.

Consolidating Debt from Student Loans

Student loans from the federal government are often very favorable and very forgiving. Under certain circumstances, such as working in certain non-profit sectors, you can have student loans deferred or cancelled. Still, student loans can become a large burden, especially since they’ll often be your oldest loans. Consolidating debt from student loans can help you close out a long delinquent account.

Consolidating Debt from Personal Loans

Personal loans are an extremely broad category. The terms and interest rates for personal loans varies widely depending on your situation and credit rating. Many people take out personal loans in order to consolidate debt. Consolidating debt with a personal loan can be advantageous, as long as you get better rates than the debt you are consolidating.

Consolidating debt can be a useful tool when it comes to getting out of debt and getting your personal finances under control. Consolidating debt has the advantage of getting you lower interest rates, cutting down late fees and organizing your obligations into one easy monthly payment.  Explore your options to see if consolidating debt is right for you.