Is debt consolidation right for you?
Debt consolidation means taking out one new loan to pay off several existing debts, usually high-interest credit cards. You're left with a single fixed monthly payment and a set payoff date.
When it can help
- You can get a lower APR than you're paying on your cards. That's the main way consolidation saves money.
- You want a finish line. Card minimums can stretch payoff out for years. A loan has a fixed end date.
- You want one payment instead of juggling several due dates.
When it may not
- The new APR isn't meaningfully lower, especially after an origination fee.
- You're likely to run the cards back up. Consolidating and then adding new card debt leaves you worse off than before.
- A longer term lowers the monthly payment but can raise the total interest you pay.
Run your own numbers
Our debt consolidation calculator compares what you'd pay in interest on your current plan with a consolidation loan, side by side.
Other options
A 0% balance-transfer credit card, a call to your card issuer to ask for a lower rate, or a nonprofit credit counseling agency (look for NFCC members) may also be worth considering.
This guide is general education, not financial advice.