Debt consolidation is marketed as a simple fix for overwhelming bills. Sometimes it is—but not always. Understanding the tradeoffs protects you from costly mistakes.
Pros
- Single payment: Easier to manage than multiple due dates
- Lower interest: Personal loans often beat credit card APRs
- Fixed payoff date: Clear end point vs. minimum-payment treadmill
- Credit score boost: May improve utilization if cards stay open with zero balances
Cons
- Origination fees: Upfront costs of 1–8% reduce net savings
- Longer terms: Lower payment but more total interest if term extends
- Temptation to re-spend: Empty cards can lead to double debt
- Does not fix overspending: Behavioral change is still required
When it makes sense
Consolidation works when your new APR is materially lower, you have stopped adding new debt, and total interest over the loan term is less than continuing minimum payments on cards. We model both scenarios with your actual numbers before recommending a path.
Debt Consolidation Help