Consolidating debt into one payment

If you are struggling to pay off multiple credit cards, consolidating your debt may allow you to reduce your interest rates and lower your monthly payment.However, a lower monthly payment can mean a longer repayment term and more interest paid over the life of the loan.A loan with a longer term may have a lower monthly payment, but it can also significantly increase how much you pay over the life of the loan.

However, keep in mind that all DMPs charge fees, and some can be excessively expensive or even fraudulent.

Basically, the DMP plays policeman, taking your monthly lump-sum payment and distributing it to your creditors until the accounts stand at zero. According to Greenberg, less than 35 percent of the people who call consumer credit counseling agencies truly can benefit from a DMP. This is a numbers fudging claim that holds true only in the narrowest of circumstances.

For instance, if you miss two 0 payments on a ,000 balance, the third month's bill will make it 0 that you owe.

So you can bet that where competition rules, advertising spin appears.

Here are 10 myths about debt consolidation and the truth about them.