Trunk, many credit unions offer unsecured loans at good rates: mine offers “signature” loans at 10%-13%, and personal lines of credit at as low as 9.4%.
When lots of companies spend millions of dollars to tell me how they’re going to save me money, I check to make sure my wallet is still where I left it.
That’s a heck of a loan.
Not to belabor the point too much, but I would wager to guess that that’s for people with great credit, and not people who are at the stage of needing to consolidate loans. I could be wrong.
I used a consolidation loan a few years ago when I let my credit card debt get out of hand. I went through a credit union and got a good rate on a personal line of credit but I had to have my father cosign. One of the conditions of the loan was that I close all my open cards and they would open a small limit card with the credit union for me. So, yeah, they’re not all that easy for someone who’s already having trouble with credit to get.
I think the advice against consolidation loans is because so many people run the cards right back up again. If you can manage slightly more than the minimum payments, you can snowball the cards (paying each one off one by one), you’ll keep your credit rating up, and eventually reach the point where you qualify for low interest balance transfers and can pay the cards off more easily. Plus, after the agony of paying 'em off, you probalby won’t run 'em right back up again…
Completely unsecured, prime plus 1% (I believe - I’d have to check). The interest was around 5% for a while, but it’s creeping back up again. I think it’s around 9% now. My husband and I both have A+, as-good-as-it-gets credit ratings, we’re both employed, we’re both in our thirties, and we’ve been with our banks for a long time. I believe those are all factors in banks granting unsecured lines of credit.
Ah, its great isn’t it? 
I had to reapply for another loan when I kept my credit cards and ran up more debt (one company even doubled my limit!)
For the unsecured “signature” loans, the rates only vary depending on the length of the loan: a 12- month loan is offered at 10%, but a 60-month loan is offered at 13%. For the personal line of credit, the credit limit determines the rate: for $1000-2000 it’s 11.4%, for $2500-9500 it’s 10.4%, and for $10,000-20,000 it’s 9.4%. A person’s credit will affect their ability to be approved for the loan, but has nothing to do with the rate.
(My cite for all of these rates is here.)
They also don’t care what the loan is for: I’ve taken out small and big ones for everything from car repairs to veterinary bills to moving expenses, and am hoping to get another one next week.
Credit unions rock. 
Another thing to consider when consolidating is the company. Often debt consolidation offers that come in the mail are from shady or disreputable companies that are supposed to make the payments to your creditors for you but may or may not make them on time. You need to watch them to make sure they are actually making the payments and not just taking your money. If they are late or don’t make a payment for you you are screwed because the creditors still want their money from you.
If you have to consolidate I would go through a credit union if possible. We got a loan right out of college with a decent interest rate, the credit union wrote the checks to the creditors themselves and we gave them our credit cards or showed them proof of cancellation. We then had an automatic payment set up so that each week after we got paid the credit union took their payment. We paid off something like $10,000 in 2 years this way with not much income because it was the first thing that got paid.
Consolidating student loans is different, I think it is usually good to consolidate those.
So in other words … sometimes consolidating debt is a good idea. Sometimes consolidating debt is a bad idea. It depends on a lot of different factors.
Geez! Isn’t there anything in life that’s simple? 
Consolidating debts isn’t bad.
Moving unsecured debt over to secured debt is bad.
Paying your credit card balances off every month is good.
Not spending more money than you make is good.
(Of course, neither of those is necessarily easy, but you asked for simple, not easy)
I think **Frank ** has the right idea, but I also thing there are two different things being talked about here. One is trying to borrow one’s way out of debt, which just means borrowing more to pay off old loans, hopefully at a lower interest rate. And **Frank ** is right about that – it’s just too easy to leave those old credit lines open and charge them up again. Besides, if you are making a total of $400 a month in payments, borrow again to pay off all the old loans and make a $250 a month payment, you’re just taking longer to pay off the debt.
True debt consolidation, on the other hand, means someone else assumes responsibility for seeing that your payments are made. You make one payment to a debt consolidation service, they make sure the money gets distributed to your creditors. Meanwhile, your credit is frozen so you can’t dig yourself in deeper, and you get counseling on how to handle your finances.
TMI time: My wife and I committed the former error for years until the loss of a job forced us to do the latter. It changed forever the way we manage our money.
It can also actually mean deferrment, esp. with student loans. Federally backed loans can be deferred if you go into the military or get certain other federal jobs as a partial benefit for how shitty public sector salaries are. Also, student loans in particular make it easy to change your payment arrangements if your financial circumstances take an unexpected downturn as long as you work it out with the holder of your note in advance. Once you’ve consolidated you’re no longer holding the specially regulated federal student loan debt, so those deferrment programs no longer apply (because now you’re in the hands of a third party who never agreed to those provisions).
–Cliffy
Emphasis mine.
That’s the kicker. You got a good rate because your father, who presumably had better credit than you, was on the line for repayment.
Well, yeah. And I acknowledged that in my post and then gave other advice for those who don’t qualify for a lower interest loan.
From the people who brought you “There’s An Exception to Every Rule, and You Just Know That Some Dope(r) Will Come Along And Mention The Exception to Yours”: I consolidated my student loans with American Education Services (then the Student Loan Servicing Center) almost immediately after graduating, but still qualified for deferrments and forbearance. I had a “financial hardship” forbearance for almost 3 years (which I think was the max), and just recently there was one semester when I was enrolled in grad school full-time and my loan was automatically deferred.
You might have been just pointing out the difference between a federal loan and a private loan, but I don’t want anyone to get the idea that consolidating their student loans means they’ll never be able to get a deferrment or forbearance.
Thanks for the clarification.
–Cliffy