Debt Consolidation
Definition
Debt consolidation combines several debts into one new loan or balance, leaving a single payment instead of many. It is used to simplify repayment, to lower the rate, or both.
The debts themselves do not go away. They are repaid by the new borrowing, and that new balance is then repaid on its own terms.
Whether it costs less turns on two things: the new rate against the blended rate of what it replaces, and the new term. A lower monthly payment reached by stretching the term can still raise total interest.
Common routes are a personal loan, a balance transfer card, and borrowing secured on a home. The last converts unsecured debt into debt secured on the property.