Debt Consolidation

When to Consolidate

Debt consolidation involves taking out a new loan (usually a personal loan) to pay off multiple high-interest debts (like credit cards). It makes sense if:

• Lower Rate: The new loan has a significantly lower APR than your credit cards.
• Simplified Bills: You replace 5 due dates with just 1 monthly payment.
• Fixed Term: Personal loans have a set end date (e.g., 3 years), forcing you to be debt-free by then.

The Trap

Don't consolidate if you haven't fixed the spending habits that caused the debt. Many people pay off their cards with a loan, only to run up the balances again, ending up with double the debt.