When consumers get in over their heads in debt, many of them turn to some form of unsecured credit card debt consolidation as a method dealing with mounting bills. Unfortunately, the debt consolidation process can be extremely confusing for the average person.

Few consumers know what their options are when it comes to consolidating unsecured debt and credit cards. As a result, many consumers are caught by surprise at some point in the process. These surprises can often end up costing the consumer a large amount of money.

Most consumers consolidate their unsecured debt to take advantage of lower interest rates or lower monthly payments on their credit cards and other unsecured debt. However, there are a few potential surprises to watch out for.

The first thing many consumers do not understand is that they may be risking their home. If you consolidate unsecured credit card debt by refinancing your home or using a home equity loan, you are actually converting those unsecured debts that have no collateral into a new, secured debt that uses your home as collateral!

Many consumers opt for unsecured credit card debt consolidation to take advantage of a lower interest rate. Most people reason that a lower interest rate means you will save money. However, this is not the whole story!

It is possible to get a lower interest rate and still end up paying more money than you would have originally. Consolidation through refinancing or home equity lines of credit may involve many large fees, transaction charges, or other hidden fees. If you do not factor in the cost of all fees and charges, you may end up paying a lot more money to obtain that lower interest rate.

Yet another surprise for many consumers also seems to be difficult for some to understand, but it is a fact of life in the world of credit card consolidation. It is also one of the most important facts to remember if you are trying to get out of debt and build wealth. Getting a lower monthly payment does not mean that you are saving money.

This "surprise" is actually fairly obvious to some, but absolutely mystifying to others. The truth is that in many cases a lower monthly payment on your debt will cost you more money in the long run, even at a lower interest rate. The longer it takes you to pay off your debt, the more money you will have to pay in interest and finance charges.

It is tempting for most people to take a lower monthly payment and have a little bit of extra spending money every month. However, you could often save much more money and get out of debt much faster by biting the bullet now and paying as much as you possibly can towards your debt. While you may have a little bit less cash now, once your debt is paid off you will have much more spending (and hopefully investing) money in your pocket.

If you are looking into your credit card consolidation options, it is important to get a good understanding of what will happen. By becoming informed, you can avoid nasty surprises and make financially smart decisions with unsecured credit card debt consolidation.

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About the Author

M. Carter is an accredited financial counselor and contributor to the Unsecured Credit Card Debt Consolidation Guide, where you can learn how to avoid even more consolidation mistakes and find out the smartest and best ways to consolidate unsecured credit card debt.