As many as 6.5 million people have turned to consolidation loans to deal with debts over the last three years.

Furthermore, 1.29 million set up debt consolidation loans of over £20,000 – as the burden of credit card, store card, and personal loans bears down.

A study by Money Expert reveals younger people are the most likely to find themselves in debt problems and turn to consolidation loans.

Sean Gardner, chief executive of Money Expert, said: "Anyone who is juggling a range of debts with money owed on credit cards, store cards and loans should be acting to get their debts under control.

"With average standard credit card rates at 17.01 per cent compared to average unsecured loan rates of 8.44 per cent it is clear that borrowers can cut their monthly interest bill by moving."

However, people are warned not to clear credit and store card debts with a consolidation loans and then start to use them again – building up a greater debt still.

A consolidation loan should be treated as a way of turning round your finances, and not dipping back down into debt.

Mr Gardner said: "It is crucial that borrowers see consolidation as a wake-up call to get debts under control.

"It shouldn’t be something you keep on doing simply to tide you over from year to year."

Money Expert has also reported a rise in secured loans used to consolidate debts – with home owner loan applications up 85 per cent in the three months to the end of January 2008 compared to the quarter ending October 2007.

Those consolidating debts through a loan secured against their home are particularly warned to use the loan as a chance to change spending habits – as failing to cover this loan means their home could be lost.