Thursday 8th November, 2007 

Debt consolidation loans can be a solution, states price comparison website.

Personal finance director for uSwitch, Mike Naylor, has suggested that people who have suffered from stealth charges on their credit cards should consider consolidating their debts into one loan.

Mr. Naylor illustrated the savings and peace of mind that debt consolidation can bring when consolidating £5,000 repaid over three years. He explained that, if done correctly, consumers would only pay interest of £504.76 on a typical APR of 6.5%. This should be compared to some store card rates of 25% where the amount of interest paid would be £1923.09 or undiscounted high street credit cards rates of 15.5%, where the interest would be £1195.

Mike Naylor explained that the impact of the credit crunch may cause some credit card providers to examine their margins and look for profit elsewhere. As a consequence, terms and conditions could be changed, which would result in the consumer being charged more for credit.

Debtwatchdog agrees with these comments. Terms and conditions of any contract should be examined as a matter of course; although many consumers fail to do so, thereby causing themselves untold misery. With credit cards, it is vital that you understand how they operate. Conditions which may appear insignificant but end up being costly are; balance transfers fees which have no cap, cash withdrawal fees and the custom of clearing the most expensive debt last.

If you are juggling debts on credit cards, do your own comparison. Check the terms of your contract for fees, work out how much interest you will pay until your debts are cleared and test this against the amount you would pay with a loan over the same period.

If you require any help or information regarding any debt problems you have, use Debtwatchdog . Our free tools will help you develop an action plan to attack your debts. Submit your SOA to be reviewed by our forum members and seek help and advice from people who have been in a similar position to you.