Advertisements on TV, online and in print make offers of great interest rates on home equity loans to consolidate your debt or debt consolidation loans. Advertisements for zero percent credit card balance transfers tempt Americans struggling with debt. What they fail to mention is that the majority of consumers who need help with their credit, will not qualify for the interest rates advertised on television and elsewhere. Nonetheless, it may well seem that taking out a single loan to pay off your unsecured debt may be worthwhile. Payments may be lower than your current minimum payments, and debt consolidation loans, particularly home equity loans, often have minimal qualification requirements. Frequently, by the time you have applied for the credit card or loan, you find yourself tempted to accept the line of credit even if the interest rate is not what was advertised.

One of the most common forms of debt consolidation is the home equity loan. Home equity loans are easy to get and even offer tax breaks for many people. They can be a practical choice if you are financially secure, have substantial home equity and need to do some home renovations. There are times when tapping into this asset is a finally reasonable move; however, as with most use of credit, those times have little to do with financial difficulty. They are not, however, a wise decision for credit problems. If you already have credit difficulties, they are likely the result of either financial hardship of one sort or another, or poor spending habits. A home equity loan may stop the creditors from calling, but it will not fix the debt, nor will it help you develop new spending habits. While unsecured debt will not threaten your home or family, using your home as collateral for a loan to pay off unsecured debt can leave your home at risk if you default on your home equity loan.

A zero percent credit card is another means of debt consolidation some Americans opt for; however, this, too, has substantial difficulties. Zero percent interest rates are offered to entice you to switch credit cards, and are typically limited to a short period. Interest rates will jump at the end of this introductory period, and will also jump if you are late with payments. Also, you will likely need to move onto another low APR introductory rate when the introductory period is over. Opening multiple credit lines will drop your credit rating over time. If you are currently making only the minimum payment on your credit cards, consider whether you will do any more than that. If you have lacked the ability or self-discipline to reduce your debt previously, consolidating that debt with a credit card is unlikely to improve those habits. Making the minimum payments on a higher balance card will do your financial health and well being no good at all.

Unsecured debt consolidation loans are another possibility that many Americans consider. These loans often offer little financial benefit, but may be somewhat more convenient, since you can make a single payment as opposed to multiple payments. Interest rates may well be rather high, since the loan is unsecured. Again, this form of debt consolidation solves nothing at all in terms of your overall financial outlook.

Obtaining new credit, mulitple balance transfers, and cash advances can actually contribute to lowering your credit score.  See www.myfico.com.  These types of actvities do little or nothing to improve your overall financial situation.  The best course of action is to pay as much as you can towards the balances to quickly reduce your burdent of debt.

One critical element that all forms of debt consolidation fail to address is the financial habits that led to credit difficulties initially. While credit problems may be the result of illness, divorce, job loss or other unpredictable hardships, more often than not they are simply the result of poor spending habits. Debt consolidation will not fix the habits that led to credit problems, nor will it provide you with the self discipline to pay off your debt.

What can you do? Seek out financial counseling or courses to correct your spending. In cases where debt is not out of control yet, this may be all you need, and you may well be able to manage your credit difficulties without further assistance. If your debt is beyond what can be repaired with simple financial education and better spending habits, consider debt settlement assistance from a reputable company like Provanta Corp.