Personal loans 'can be good way to consolidate debt'

Rachel Lacey, editor of Moneywise personal finance magazine, said that there are still some good deals on personal loans to be had, despite the credit crunch.

"The rates are still looking reasonably good - you can easily get something under seven per cent," she remarked.

Those who choose to take out a personal loan to consolidate debts, however, should be careful to ensure that they do not continue to borrow more money, Ms Lacey warned.

Furthermore, she said that it is important for consumers to "make sure" they pay off what they owe every month and "respect" the importance of the decision to stop borrowing more.

Research from uSwitch indicates that of the three million people who took out a consolidation loan, 65 per cent continued to accumulate debt.