How debt consolidation works
Debt consolidation replaces multiple repayments with one — often via a personal loan or a balance transfer credit card. The goal is lower interest, simpler cashflow, or both.
Key pros and cons
The upside is clarity and potentially cheaper interest. The downside is extending the term, fees, or failing to change spending habits that created the debt.
- Pro: one payment date and clearer budgeting
- Pro: may cut interest vs high-rate cards
- Con: longer terms can raise total cost
- Con: new credit may be declined after a hard search