their loans early, no more than a handful succeeds - only one in four people say they manage to clear their debts early.That said, people who paid off their consolidation loans early were less likely to go on to accumulate more debt.

David Kuo, Head of Personal Finance at Fool.co.uk, says: “Consolidation loans aren’t necessarily a bad idea. After all, it can make sense to roll up several expensive debts into one affordable monthly payment if you are faced with a myriad of claims on your money.

“Another option is to snowball your debts. This means paying off debts with the highest rate of interest first, while making minimum payments on other loans.

“But if you do choose consolidation loans, do so carefully. For instance, around half the loans taken out by people in our survey carry a penalty for early settlement. This is unreasonable, and is unlikely to encourage borrowers to pay off their loans sooner.

“Consolidation loans can be a welcome lifeline for people caught in financial difficulties. But the lifeline can quickly turn into a noose if you submit to the temptation of running up further debts.”

Three dos and three don’ts when taking out consolidation loans:

Do ensure the loan is flexible if you are disciplined so you can make overpayments or pay the loan off early.

Do make sure that you take out a fixed-rate loan to avoid sudden interest rate rises.

Do avoid payment protection insurance unless you're absolutely sure you need it.

Don’t borrow more than you need.

Don't put your home at risk by taking out a secured loan.

Don’t use your credit cards until you have fully paid off your consolidation loan.