Debt consolidation can simplify your payments.
Bring several debts together with a payment that fits your budget.
When debt consolidation could help
If you have several debts, combining them may give you one payment and a clearer payoff plan. Start by adding up what you owe and what you pay each month.
Ways to consolidate debt
See which option fits your debt, your budget, and how you want to pay it off.
| Option | Why it may fit | What to check |
|---|---|---|
| Debt consolidation loan | You want to pay off several debts with one set payment. | Rate, fees, and total cost. |
| Balance transfer card | You can pay down card debt during a low-rate offer. | Transfer fee and rate after the offer ends. |
| HELOC | You own a home and want to draw funds as needed. | Changes to the rate and payment, plus the risk to your home. |
| Home equity loan | You own a home and want one lump sum with a set payment. | Closing costs and the risk to your home. |
How debt consolidation works
- 1Choose the balances to combine
- Decide which debts you want to pay off with a new loan or move to a balance transfer card.
- 2Pay off or move the old balances
- A consolidation loan uses new funds to pay the selected debts.
- A balance transfer moves card balances to another card.
- Check that each old account shows a zero balance after the payments or transfers go through.
- 3Pay the new balance
- You make payments on the new loan or card until it is paid off.
- Your rate, fees, and repayment time determine the total cost.
Common questions
How does debt consolidation work?+
Debt consolidation combines payments through a new loan, a balance transfer, or a debt management plan. Each route works differently. Compare its fees, payments, and total cost with your current debts.
Is debt consolidation a good idea?+
It may help if the payment fits your budget and the full terms improve your situation. One payment alone does not mean you will pay less or finish sooner. Consolidation may not help if you keep adding debt.
How do debt consolidation loans work?+
You use a new loan to pay off existing debts, then repay the loan. Approval and terms depend on the lender and your application. Compare the total cost, including any fees, with what you owe now.
Can I consolidate credit card debt?+
Yes. You may be able to use a loan, a balance transfer, or a debt management plan. Check the cost and payment for each route before moving your balances.
What is the difference between debt consolidation and debt settlement?+
Consolidation changes how you repay debts. Settlement seeks to resolve debts for less than you owe. Settlement can bring fees, collection activity, credit harm, and possible tax consequences.
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