Debt Consolidation Explained

Debt consolidation is a strategy that combines multiple debts into a single loan or payment. It can simplify repayment, reduce interest costs, and make managing debt easier — but it’s not the right solution for everyone.

What Is Debt Consolidation?

Debt consolidation involves taking out a new loan or credit product to pay off multiple existing debts, leaving you with one monthly payment.

Common Ways to Consolidate Debt

• Personal loans
• Balance transfer credit cards
• Home equity loans or HELOCs
• Debt management plans

Pros and Cons of Debt Consolidation

• Simplifies repayment
• May lower interest rates
• Can extend repayment time
• Requires discipline to avoid new debt