What is debt consolidation?

Modified on Thu, 27 Apr 2023 at 10:22 AM

Debt consolidation offers a way to better manage debt. If you’re someone who is paying off multiple outstanding balances, for example, two credit cards and a personal loan, it may be helpful to combine some or all of your debt into one single payment. 

Let’s take a closer look at the benefits of debt consolidation and how it can help! 

Why should I consolidate my debt? 

  • It can help with budgeting as it will allow you to reduce some or all debt payments into one payment

  • Typically less interest is charged on the consolidated amount

  • Debt consolidation loans typically have set terms, so you’ll have a set date for when you will finish making payments and be debt free!

  • Can have a positive impact on your credit score

When should I consider consolidating my debt? 

  • Take a look at your loan amounts, existing lines of credit, interest rates and credit card balances. If any debts can be paid off in 1 year or less, debt consolidation may not be the best option

  • If your credit score has increased since taking out other loans, you will likely qualify for a debt consolidation rate that is lower. This will help you save on interest payments throughout the lifetime of your loan

Having a pulse on your financial situation and knowing what options are available is important as it can help you build up your financial health. Debt consolidation is a great solution to be aware of and guide you to becoming debt free sooner.

We do our best to provide useful information. However, we cannot guarantee that the information is complete, accurate, up-to-date or otherwise reliable for any particular purpose. This article is provided to you as information only and not as advice tailored to your reality.

Was this article helpful?

That’s Great!

Thank you for your feedback

Sorry! We couldn't be helpful

Thank you for your feedback

Let us know how can we improve this article!

Select atleast one of the reasons
CAPTCHA verification is required.

Feedback sent

We appreciate your effort and will try to fix the article