Debt Consolidation
Consolidating swaps several debts for one. That can lower your interest, your payment, or both, but it can also stretch the debt out and cost more. The guides here run the numbers for each case and compare consolidation fairly with counseling, settlement and other routes.
Start here if: You're juggling several balances and want fewer payments, a lower total, or both.
Does Debt Consolidation Actually Save Money? Three Worked Cases
Run the numbers on three hypothetical debt mixes and you see the pattern: the rate, the term and what happens to the empty cards decide whether consolidating pays off.
The debt consolidation guides, in a sensible order
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Worked example
Does Debt Consolidation Actually Save Money? Three Worked Cases
Run the numbers on three hypothetical debt mixes and you see the pattern: the rate, the term and what happens to the empty cards decide whether consolidating pays off.
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Comparison
Balance Transfer Card or Consolidation Loan: Which Costs Less?
A 0% intro card can be the cheapest way to clear a balance, or an expensive detour. The difference is mostly whether you can pay it off before the promo ends.
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Decision guide
Consolidation Loan, Counseling, Settlement or Bankruptcy: How to Choose
These four routes solve different problems and carry very different costs. Here is what each one does, who it fits, the rules that protect you, and how to find legitimate help.
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IIPersonal LoansWorked example
Origination Fees Explained: What They Cost and How to Size Your Loan
Worked examples of the two ways lenders charge an origination fee, the math for sizing a request so you net the cash you need, and how to tell whether a no-fee loan at a higher rate is the better deal.
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VIIBorrower ProtectionDecision guide
Before You Borrow: Alternatives That Can Cover a Short-Term Gap
A loan is one way to cover a gap. Often the cheaper move is to change the bill instead: its due date, its size, or who helps pay it. Here is what to try first, matched to the most common situations.
Questions people ask about debt consolidation
Does a consolidation loan hurt my credit?
Applying usually means a hard inquiry, which can lower a score slightly for a while. Paying cards down can lower your credit utilization, which often helps. What matters most over time is paying on schedule and not running the cards back up.
Is debt settlement the same as consolidation?
No. Consolidation replaces debts with a new loan you repay in full. Settlement tries to get creditors to accept less than you owe, which usually means falling behind first and can damage credit and create a tax bill. The routes compared.
Where can I find free or low-cost help?
Nonprofit credit counseling agencies can review your budget and, if it fits, set up a debt management plan. Look for agencies accredited by a national body and ask about fees in writing first.
- Comparison
Consolidation ComparerList your balances and payments, add a hypothetical consolidation loan, and compare payoff time and total interest, fees included.
- Calculator
Loan Payment CalculatorEstimate the monthly payment and total cost of a fixed-rate loan, including an origination fee and extra payments, then compare two scenarios side by side.
- Guided questions
Before-You-Borrow GuideAnswer five short questions about what the money is for and how soon you need it. Get options to look at before, or instead of, a loan.
- Debt consolidation
- Combining several debts into one, usually with a new loan or a balance transfer card. It saves money only if the total cost, including fees and time, is lower than what you'd pay on the original debts.
- Balance transfer
- Moving a credit card balance to another card, often with a low or 0% introductory rate and a transfer fee. Any balance left when the promotion ends is charged the regular rate.
- Debt management plan
- A repayment plan set up through a credit counseling agency, which may negotiate lower interest rates or fees with your creditors. You make one payment to the agency, which pays the creditors.
- Debt settlement
- Negotiating with creditors to accept less than the full amount owed, often through a for-profit company. It can hurt credit, may create taxable income, and isn't guaranteed to work.
- Credit counseling
- Help from an agency, often a nonprofit, to review your budget and debts and discuss options. Counseling may lead to a debt management plan but doesn't have to.
- Credit utilization
- How much of your available revolving credit you're using, as a percentage. Lower utilization generally helps credit scores.
- National Foundation for Credit Counseling
A national network of nonprofit credit counseling agencies.
- FTC: Coping with debt
The Federal Trade Commission's guide to getting out of debt and avoiding debt relief scams.
- U.S. Trustee Program: approved credit counseling agencies
The Justice Department list of agencies approved for the counseling required before bankruptcy.