Consolidating unsecured credit line debt
Unsecured debt consolidation is a means of combining multiple unsecured debts in a way that makes them simpler to manage.
Unsecured debts are personal debts for which there is no physical collateral, such as credit card debts or medical debts.
One is to consolidate all their credit card payments onto one new credit card – which can be a good idea if the card charges little or no interest for a period of time – or utilize an existing credit card's balance transfer feature (especially if it's offering a special promotion on the transaction).
Theoretically, any use of one form of financing to pay off other debts is practicing debt consolidation.
You use the loan to pay off multiple balances and then pay the personal loan back in one set monthly payment for a certain period of time at a certain interest rate.
That precludes you from having to keep track of multiple payments (and balances) each month. That’s because the rates on personal loans are determined largely by your credit score.
Having great credit gets you the lowest interest rate on these loans.
If you have poor credit, you may not be able to qualify for a loan.