The are many alternatives to consolidating your debts and each of them offers certain favors but also carries a few disadvantages. Today’s post on title loans Houston experts will be dedicated to informing you about the advantages and disadvantages that each debt consolidation solution.

1. Debt management program

This way of debt consolidation is focused on reducing the interest rate on credit card debts, by summing all credit card debts into one monthly payment that is more affordable than monthly installments of individual credit cards.


  • Reduced interest rate
  • Fixed monthly payment amount
  • Debt management is not another loan you will take
  • It’s not a binding contract and you can withdraw from this program at any time
  • After accessing this program, the phone calls and other communication with your creditors conclude
  • Financial analysis and advice from your credit counselor are free
  • Doesn’t require collateral as this is not a loan by itself


  • You must pay monthly fees for managing your debt plan
  • The debt management program demands to close all your credit card accounts

2. Credit card balance transfer

Credit card balance transfer considers several credit card balances that are transferred into a single card. This usually involves a low or zero percent of interest rate in an introductory period that is up to 18 months. On the other hand, this method can be inconvenient if you fail to repay the whole balance during the introduction period, as in this case, your interest rate cant be even higher than one before the credit card balance transfer.


  • It allows you to take the advantage of the introductory period of no interest to save on interest and pay off the principal
  • Simplifying the payments by consolidating multiple payments from multiple cards


  • Requires high credit score
  • Requires the approval for a high credit limit to handle multiple credit cards debts
  • Balance transfer cards often charge 3-6% of shifted debt amount on behalf of fees. That will add to your debt amount.

3. Home equally Loans and lines of credit (HELOC)

Home equality is the amount that represents the difference between the estimated home value and the mortgage amount you owe. If this value is high enough you can borrow a part of that equity. This often considers affordable interest rates that provide you with favored debt consolidation.

However, this method implies another monthly payment which makes them a second mortgage.


  • Fixed interest rate and a fixed amount of monthly payment
  • Large loan amount
  • Long repayment period
  • Lower interest rates than other loans such as personal loans or credit cards
  • Variable rate for HELOCs


  • Your home is a collateral
  • Loan interest is not a tax-deductible
  • Longer funding timeline than for other loan types

4. Peer-to-peer loans

This is a method of debt consolidation that connects borrowers with a network of lenders. The network is a platform where you can directly borrow money from lenders without a middleman. The criteria for getting a loan from individual lenders are usually less rigorous.


  • Due to high competition, investors can offer significantly lower rates than you expected
  • Monthly payments are fixed, with the payment period usually between 3 and 5 years
  • Most lenders have a practice of reporting individual payments of their loanees to credit bureaus, so you can expect that your credit score may improve


  • There might be fees applied to the loan that will affect your loan costs. For example, origination fees might be from 1 to even 8% of your loan amount.
  • When the platform is determining borrowers’ risk rank, the users have no insight into the criteria applied for evaluating grade level
  • The process of getting a loan can stretch to more than a week

Final Thoughts

Hopefully, by displaying the pros and cons of each alternative, we have helped you decide on the most favored solution for debt consolidation and the one that best meets your needs.