If you’ve been offered a consolidation loan or you’re thinking about taking one out; tread carefully.

Many credit card companies are offering what appear to be great deals on 0% interest for transfers whilst other finance companies make tempting offers for consolidation loans. But the vast majority of people who take out such loans end up re-using their credit cards and getting further into debt.

That isn’t to say that all consolidation loans are bad by any means, merely that the main dangers lie in psychology; people who have already shown that they’re liable to get into debt are fooled into thinking the immediate problem has gone away and therefore they start spending again and exacerbate the problem.

On the other hand, finding the right kind of company to consolidate your debts for you and which will deal with your creditors – encouraging those creditors to accept lower levels of interest payments – can be a good move. Just make sure the company’s up-front charges aren’t excessive and that the company has received good review s from objective sources.

A consolidation loan is usually a better bet than credit card debt – even if it’s at 0% for a while – if you know that you’re weak-willed. That’s because the loan has to be paid off in set monthly amounts usually over a period of three to five years. You will typically be paying around 6% APR on average at current rates, but at least it’s one fixed amount per month – and it’s a payment you know you have to make.

Credit cards at 0% may be a good idea if you really do have a lot of self-discipline and trust yourself not to live beyond your means – but even here there can be heavy up-front transfer fees which you should take a look at.

A simple bank loan or a re-mortgage is another alternative but here again – only if you trust yourself. And the disadvantage here is that there isn’t a third party company negotiating with your creditors on your behalf.

Overall then – tread carefully and do all the homework you can. Most importantly of all – look in the mirror and ask yourself if you really will live within your means from now on, including making the interest payments. And if you don’t trust yourself enough – then a consolidation loan is probably a better idea than the 0% credit card route, as long as you cut up any remaining credit cards once you’ve taken out the loan.