Debt consolidation is often the last resort for consumers whose paychecks are swallowed up every month by high interest credit card payments. It is a process which involves moving the consumer’s various credit card balances under a single fixed interest loan, with the end result being total depletion of debt.

One must use caution in deciding which debt consolidation firm to approach. Though many debt consolidation agencies are honest, consumers must be aware that some agencies are set up just to profit from already harried debtors. They prey on consumers already facing a lifetime of hardship due to debt, and leave them in a much more precarious situation.

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Inflation makes tomorrow’s money potentially worth less than today’s, that makes borrowing more appealing to borrowers, but lending less attractive to lenders in order to compensate, lenders increase interest rates, since among other items, they too know that the dollars they will be re-paid next month are potentially worth less than the ones they loan out today.

Therefore, a vicious cycle is established, as prices increase more people including companies, discover themselves needing to borrow more if they are to buy the items they require cars, home improvements, business equipment etc this tends to raise interest rates even further, since there is now more demand for borrowed cash, more demand given a set supply tends to increase prices, in this situation the price (this is the interest paid) is the total price of borrowed money.

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