Personal loans 'the best for debt consolidation'

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Personal loans are a better option for people looking to consolidate their debts than secured alternatives, according to the editor of a leading financial magazine.

Rachel Lacey, who is editor of Moneywise, stated by using a personal unsecured product, people can avoid putting their homes at risk if they struggle to keep up repayments.

However, she warned that people who use personal loans to consolidate debts must ensure they stop themselves from continuing to borrow further amounts of money.

She said: "It's no good consolidating all your credit cards and all your existing loans onto one personal loan just to carry on borrowing and using your overdraft and taking out another credit card.

"You can lower your rates by consolidating other debts onto personal loans, but you just have to stop further borrowing and you have to respect that."

At the start of 2008, Alliance and Leicester urged people in debt to take advantage of low-rate loans ease their financial burden in the new year.

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