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Consolidating your credit card bills into a single loan can be a wise financial move. Debt consolidation could lower your overall interest costs, reduce your monthly payoff, reduce late fees and over-the-limit charges, and allow for one convenient monthly payment. On paper, it's a no-brainer.

But that doesn't remedy the spending behaviors that brought you to consider debt consolidation. Ask any financial counselor, and they'll say that if you're planning on using a loan to help you get out of debt, you must also commit to changing your spending habits.

Many people spend unconsciously, not keeping track of how much they’re spending until it becomes a financial burden. Often, people acquire loans to pay off old debts yet continue buying more than they can afford. Without addressing and correcting spending habits, the cycle of debt persists. However, if you’re ready to straighten out your credit snarls and be mindful of your spending, then consolidation could work well for you.

To put it into perspective, taking four $3,000 card balances at 19%, 18%, 17%, and 16% and consolidating them into one loan at 10% would save about $43 a month in interest payments. So if you save that $43 instead of spending it, you'd have $1,500 in three years.

The most common arrangements for consolidation include the following:

• A low-rate card. You could transfer accumulated high-interest credit card balances to one card with a lower rate. Drawbacks: Attractive "teaser" rates often increase soon after activation. Read the fine print and beware of fees.

   

• A home equity loan. For homeowners, this may be the best way to reduce interest costs. Rates on a second mortgage tend to be lower and present a budget-friendly option. Also, mortgage interest can be tax deductible. Drawbacks: Lenders can seize your house if you default on payments. So make sure you’re on a path to good financial habits when deciding.

   

• A counseling agency.  Pay an agency to arrange lower rates and longer paybacks with your creditors, and manage the repayments for you. The best services will also try to teach you how to live within your means. Drawbacks: Paying off your debt on your own looks better on your credit report. Also, some questionable operators are in this field, so research the company you're considering.

If you've reached the limit on your cards, are struggling to pay the monthly minimum, or if a job loss or emergency bill would wipe you out, look into consolidating.

Managing your finances effectively requires that you be diligent and organized about paying your debts. If you need help with this, seek financial assistance. You can start by speaking with your local credit union or bank about solutions they offer to help you simplify your debt.

The alternative to debt consolidation is tackling your debt head-on with a game plan to pay it off step-by-step. Read, Get Out of Debt with the Debt Snowball Method for tips on eliminating your debt systematically.