We've all been there. You're browsing Internet shopping sites and see something you can't really afford and may even exceed the value of your savings. Oh well looks like you'll have to sell the farm or do without. But wait... you've got plenty of credit limit left on your credit card, that means you must be able to afford it otherwise why would they give you all this credit limit? A few clicks and button presses later and your luxury item is on its way. It's all so easy - you're not in any debt at the moment so what is there to worry about? A few more impulsive splurges later and pretty soon you're buried under a mountain of debt - a mountain that grows more and more every day due to the huge interest rates of most credit cards.

It can seem like an impossible situation with declaring bankruptcy the only solution and in the worst cases it may be. However, for most people there are things they can do to reduce the problem. One of these is consolidation. Sometimes half the problem is that having to make payments to several credit cards - as well as possibly other organisations - every month can be very bewildering. Wouldn't it be psychologically (and financially) more beneficial if all monthly payments could be amalgamated into one single, lower monthly payment? There are various ways to do this:

1. Balance transfers

Many credit card providers offer 0% interest on balance transfers for around the first 12 months. This is designed to attract consumers to use their credit card but there are some pitfalls you should be aware of. Some providers will charge a one-off fee to facilitate the transfer so you should be wary of this. The golden rule, however, is not to make any more purchases on this card since any repayments you make will pay off the balance transfer amount first and leave the purchases amount to increase with the much higher interest. Provided this is avoided then the balance transfer can be a very good option for credit card debt consolidation.

2. Unsecured personal loan

An unsecured loan is when you go to your bank or another lending organisation and borrow a sum of money large enough to eliminate all of your credit card debts. The interest rate on the loan should be lower than that on any of your credit cards. This solution has one definite advantage over the balance transfer in that it will allow you to shred every one of your credit cards. As long as you concentrate on saving enough money every month to pay off the loan and only buy goods and services you can afford to buy with your own money then you're making definite progress. The benefit of the loan being unsecured means that should you default on it then it won't cost you your house as opposed to other consolidation methods such home equity loans.

3. Home equity loan

With this type of loan you will be using the value of your home as collateral. As a result it is very important that you do not default on the loan and as with balance transfers you must make sure not to start spending again with the line of credit you now have available. Because the homeowner's house is used as collateral this type of loan can be one of the easiest ways of acquiring credit from a lender and could be the best option for those with past credit problems.

A final word of caution. Be extremely cautious of the numerous adverts on television from debt consolidation agencies. These companies are usually out to make as much money as they can from you, rather than having your best interests at heart. Think about it, these companies pay a lot of money to have these commercials aired - how do you think they plan to make that money back and more? There are non-profit organisations that can provide the same advice and services and my advice is to seek out these first.