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.


Consolidating your debts into a single loan may let you pay less monthly.

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.

A debt consolidation loan may lower your monthly payments.

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