There are people who advise you to never take on debt to pay off debt. Yes, Dave Ramsey and his followers, I am speaking of you! Their black and white point of view is not based on the numbers, but on their view of human psychology
Dave Ramsey will say that even if you can save a lot of money through a debt consolidation loan, don't do it. I am not going to dismiss the advice Dave gives. I understand that he bases his view on the behavior patterns of people he has observed. He has seen that too many people who pay off debt with a loan run debt up again. He says never to take on debt to pay off debt, emphasizing that people need to undergo a mind-shift so they view debt as toxic.
I admire Dave Ramsey for getting people to address their spending, taking control of their cash flow, and committing to a disciplined program of paying down debt and saving money, starting with building an Emergency Fund that protects you in case there is an unexpected expense or loss of income. What I disagree with is telling people that they should not save thousands of dollars that they could use to fund the very emergency fund Dave values so highly. Instead, Dave Ramsey tells you, as part of your "Baby Steps," you should accelerate payments to your credit card companies to get out of debt. His advice is to take money you could put in your own pocket and pay it in interest to your creditors.
it is easy to prove that you can get out of debt faster and at a lower cost by taking on a new debt if the terms are right. Depending on the interest rates on your credit cards and the rate you qualify for on a debt consolidation loan, a personal loan is the best choice.
Dave Ramsey advocates the Debt Snowball, targeting the smallest credit card balance first. Again, his point is psychological. Dave acknowledges that it is cheaper to pay off via the Debt Avalanche, where you target the highest interest card, but you are better off with the boost of seeing one card go to $0. Given the fact that the dollar savings are not often huge with Snowball vs Avalanche, Dave's point has greater weight than the huge savings