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Free debt consolidation

If you have debts with more than one creditor and are having difficulties managing them, you might have been tempted by an offer of a free debt consolidation loan.

Debt consolidation is where you replace all your individual debts with one larger debt that covers them all. So you pay one payment a month rather than several at different times.

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Debt consolidation pros and cons

Debt consolidation can make your debt easier to manage because you have only one payment to organise, possibly making budgeting easier, and giving you only one creditor to deal with.

However, even when a loan might be advertised as 'free debt consolidation' and you do not have to pay any fees to set it up, you still might end up worse off. For example, the consolidation loan might carry higher interest rates or you might have to pay it back over a longer time period, making it more expensive to pay off.

Consolidation advice

We advise you not to consolidate your debts without a thorough examination of your situation and to find out if it will really help you. We also strongly advise against consolidating your unsecured debts with a loan secured against your property because this would put your home at risk if you fall behind on payments.

We can help you decide if debt consolidation is an appropriate and affordable solution for your situation. If you use our online Debt Remedy tool, we will identify and explain other solutions to fit your specific circumstances.

Helping you become debt free...

"I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me." (Leslie, Essex)

Foundation for Credit Counselling (trading as StepChange Debt Charity) is a company limited by guarantee registered in England and Wales (Company No: 2757055 ) and a charity registered in England and Wales (Registered Charity No: 1016630). Registered office: Wade House, Merrion Centre, Leeds, LS2 8NG. Consumer Credit Counselling Service (Scotland) trading as StepChange Debt Charity Scotland is a company limited by guarantee registered in Scotland (Company No: SC162719) and a charity registered in Scotland (Registered Charity No:SC024413). Registered office: 33 Bothwell Street, Glasgow G2 6NL. Authorised and regulated by the Financial Conduct Authority.

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