What is debt consolidation?
Debt consolidation: Debt consolidation means combining several debts, such as credit card balances, into one new loan or account with a single monthly payment.
Common ways to consolidate include a personal loan, a balance transfer credit card or, for homeowners, a home equity loan. Each works differently and carries different costs and risks.
Consolidation can simplify repayment and give you a fixed payoff date, but it only reduces your cost if the new loan's APR and fees are lower than what you pay now over a similar time frame.
When you compare offers
Add up what you pay now across every balance and compare it with the total cost of the new loan, not just the monthly payment.
Related guides
- Debt Consolidation Basics
What debt consolidation is, how it generally works, and questions worth asking before you combine multiple balances into one.
- How to Compare Debt Consolidation Loan Offers
How to compare debt consolidation loan offers on APR, origination fees, term length, total cost and prepayment penalties before you consolidate.
This glossary is for general educational purposes and isn't financial, legal or insurance advice. Lendara is not a lender and does not make credit decisions. Lendara is a free online marketplace that connects you with participating lenders and providers, who set their own eligibility rules, rates, fees and terms. Lendara may receive compensation from partners, which may affect which offers appear and their order.