Consumer group Which? is warning Britons that consolidating a number of loans is not necessarily the best way to deal with mounting debt.

Most people seeking to consolidate loans are already unable to meet their repayments but some are left actually repaying more than if they had kept their debts separate. In addition, fees charged by lenders can be added to the original debt.

Philip Inman, spokesman for Which? says: “People often mistake consolidation loans as the ‘quick fix’ solution to their debt problems. They are sold as a method of paying back debt in one easy payment each month. However, people choosing this option tend to pay back much more than they originally owed.”

Mr Inman also points out a consolidated loan can present a higher risk than a number of personal loans because it is likely to be secured against a borrower’s home.

Meanwhile, Halifax Personal Loans business has reported that January is the most popular month of the year for customers to take out an unsecured personal loan.

A national New Year commitment to sort out finances means that applications rise to double that of other months of the year.

Neil Chandler, head of Halifax Unsecured Personal Loans, comments: “For many people, the start of the year is a time to get personal finances in order - transferring debt from more expensive products such as store cards or other loans.”

Adding: “Our research shows that this is certainly the case, with the number of loans taken out for debt consolidation increasing.”