A debt consolidation plan, sometimes referred to as a “DCP loan”, is a simple repayment scheme that allows you to bring together all your outstanding unsecured debt (e.g. outstanding credit card bills and personal loans from different banks) into one big loan with just one lender.

The bank that issued your DCP pays off all your outstanding debts, and your unsecured accounts are all closed, so you only need to focus on making that one easy monthly repayment. Although the consolidated amount might make you break out in cold sweat, what’s good about a debt consolidation plan is that the interest rate is low compared to that of credit cards and unsecured credit lines, which are typically in the high 20’s – as high as 28.88% p.a. these days. (As anyone who’s struggled with credit card debt can tell you, these crazy interest rates have a serious snowball effect once you’re unable to pay your credit card bill in full each month.)