Sign On
Esta página de Internet está disponible sólo en inglés. Sin embargo, tenemos otros materiales de educación financiera en español.
Can debt consolidation work for you?
Debt consolidation is one way to make paying off your debt more manageable. Instead of paying several minimum monthly payments on a number of bills, this repayment strategy involves getting a new loan to combine and cover your other loans or debts. You can then repay all of your debts with one monthly payment.
Simplify your payments
A debt consolidation loan may simplify your monthly payments into just one payment and may possibly result in lower monthly payment.
Debt consolidation often works best for those with credit card debt, which generally comes with higher interest rates. If you own a home or other valued property that you can use as collateral, lenders may be more likely to offer you lower payments and interest rates. But remember: If you use your property as collateral, you risk losing it if you fail to repay the loan.
A debt consolidation loan with a longer repayment period may lower your monthly payment, but increase the total amount you repay over the life of the loan. Making more than the minimum payment can help pay off the loan faster.
Read the fine print
Some debt consolidation options offer low introductory rates to encourage customers to transfer high-rate balances, but these rates can skyrocket after the introductory period ends. Others offer variable rates, which rise and fall with specific market indicators, such as the U.S. prime rate. Debt consolidation loans may also require that you pay your debt off over a specified amount of time. Be sure to understand the terms of the loan you are considering before you take the next steps.
Tip
It's important to understand that a debt consolidation loan simply transfers the debt, so you still have debt. Debt consolidation isn’t for everyone, but if you examine your options closely, it may help you effectively manage and reduce your debt over time.
Empower yourself with financial knowledge
We’re committed to your financial success. Here you’ll find a wide range of helpful information, interactive tools, practical strategies, and more — all designed to help you increase your financial literacy and reach your financial goals.
Products to Consider
Before you apply, we encourage you to carefully consider whether consolidating your existing debt is the right choice for you. Consolidating multiple debts means you’ll have a single monthly payment, but it may not reduce or pay your debt off sooner. The payment reduction may come from a lower interest rate, a longer loan term, or a combination of both. By extending the loan term, you may pay more in interest over the life of the loan. By understanding how consolidating your debt benefits you, you’ll be in a better position to decide if it is the right option for you. New credit accounts are subject to application, credit qualification, and income verification. You must be a U.S. citizen or permanent U.S. resident to be eligible for this product.
