In 2009, there were 576.4 million credit cards. In 2010, according to the U. S. Census Bureau, 181 million Americans are projected to be credit card holders. In 2007, a little over half the U. S. Population had a minimum of two credit cards. On average, consumers have credit obligations dating as far back as 14 years. The average household has $15,788 in credit card. The Federal Trade Commission has tips for people who find themselves in the financial red zone. Develop a budget, contact your creditors, know your rights with debt collectors, and manage your auto or home loan, are among recommendations. Another consumer strategy is debt consolidation.

Often, credit cards charge a higher interest rate than the average loan, including ones that are unsecured. These charges can skyrocket and become unmanageable. The Federal Trade Commission has an online Credit Card Calculator. The calculator allows consumers to figure out how long it will take to pay off their credit card balance if only paying the minimum due, with no additional charges. The calculator uses the total balance and the highest annual percentage rate in its determination.

A home, car, boat or other property can be used as collateral by debtors to obtain a lower interest rate via a secured loan. When collateral is used, this offsets the total cash flow required, and decreases the interest because the loan is paid off sooner, which results in less interest accrued.

An example of common debt consolidation is a student loan secured by the U. S. Department of Education. The Department of Education purchases student loans, which is referred to as refinancing. This is a misnomer because loan rates are locked in, not changed. Also, with student loans, the borrower does not pay any fees for the loan, unlike debt consolidation by private companies. Private companies earn money when consolidating student loans from the subsidies paid by federal government.

Consolidating loans can benefit the credit rating of borrowers. However, some companies do not report all of its student loans to credit agencies. Consolidated loans have come into the media spotlight. People are reportedly consolidating unsecured debt into secured debt using their home as collateral. Borrowers pay lower monthly repayments in the short term, however, over the long term, the total amount for repayment is typically drastically higher because of the longer loan repayment period.

For some consumers, reduced monthly premiums as a trade off of paying more down the line may still be attractive reason to consolidate. Consolidation loans may also provide tax advantages unavailable with other types of credit. The Federal Trade Commission website offers consumer tips on debt, credit card use and news of upcoming credit card industry changes. Debt consolidation is one of a variety of options to manage finances.