What type of debt can I consolidate?

A debt consolidation loan is a loan you take out to pay off your existing debts all in one go. There's no actual restriction on the kind of debts you can consolidate - as long as you can take out a loan that's big enough, you could consolidate anything from credit card debts to secured loans.

However, you'll need to check the 'small print' before you decide which of your debts you should pay off like this. In some cases, it makes sense to leave certain debts alone and keep on repaying them separately (unless you're determined to simplify your finances as much as possible - even if this involves paying more).

You may choose not to consolidate:

• Low-interest debts. Certain kinds of overdraft can charge very little interest (or even none at all). Transferring this debt to a debt consolidation loan will probably end up costing you more, as you'd almost certainly be paying more interest. The same might be true for 0% credit cards as well, but that 0% isn't the only figure to take into account - you'd also need to consider how often you need to transfer that debt to a new card, and how much you're paying each time you do.
• Debts which come with an Early Repayment Charge (ERC). With some debts, most commonly for mortgages or secured loans, you'll have to pay extra if you repay them sooner than originally agreed. Check the small print and find out if your lender would impose an ERC, and how much this would cost you.

So what type of debt can I consolidate?

You can consolidate lots of different kinds of debt. To name the most common ones:

• Credit cards
• Store cards
• Catalogue debts
• Overdrafts
• Credit agreements
• Unsecured loans
• Secured loans
• Conditional sales agreements
• Hire Purchase deals

Depending on your circumstances, you could even consolidate your mortgage debt. A debt consolidation mortgage is a new mortgage that's large enough to pay off your previous mortgage and your other debts, basically consolidating all your debts into one new mortgage, leaving you with just one monthly payment - to your new mortgage provider.