What Is Consumer Consolidated Debt?

Consumer consolidated debt is a method of managing many debt payments at once by combining them all into one monthly payment, reports About.com. Consumers can accomplish this by taking out home equity loans or debt consolidation loans, explains the Consumer Financial Protection Bureau. Alternatively, they can transfer their various credit card debts to one account.

Before consolidating their debts, consumers should consider the fees, interest rates and other risks involved, advises the Consumer Financial Protection Bureau. Consolidating debt with home equity loans puts their homes at risk. Although they may be able to obtain the loans at low interest, consumers can lose their homes if they are unable to pay them off. Sometimes, debt consolidation loans begin at low interest, but over time, the interest rates rise. These loans also often carry hidden fees that add to overall debt.

Transferring credit card debt balances to one card carries similar risk, as interest rates on zero- or low-interest cards may go up after an initial limited time period, according to the Consumer Financial Protection Bureau. Credit card companies also often charge balance transfer fees of a percentage of the transferred amount. An alternative to debt consolidation involves contacting creditors individually to negotiate better terms.