Primer · Debt Consolidation
Debt Consolidation: One Loan to Replace Many
Personal loans, balance-transfer cards, and home equity products that swap a stack of high-APR debts for a single lower-rate obligation — when each works and when each backfires.
Debt consolidation refactors *how* you owe money without reducing *how much* you owe. The win comes from rate arbitrage: replacing 22% revolving APR with a 10% installment loan or a 0% balance transfer.
Three vehicles
- Personal loan: fixed rate, fixed term, no collateral. Best for borrowers with a 680+ FICO consolidating $10k–$50k.
- Balance-transfer card: 0% intro APR for 15–21 months, 3–5% transfer fee. Best for borrowers who can fully pay off within the intro window.
- Home equity loan/HELOC: lowest rates, but converts unsecured debt into secured debt against your home.
When it backfires
Consolidation only works if you don't re-run up the original balances. About 38% of borrowers who consolidate via balance transfer carry a balance past the intro window — at which point deferred interest can apply retroactively on some products.
Keep Reading
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Consumer complaint databases serve as an early-warning tool to identify patterns of misleading savings claims and undisclosed fees. Effective research requires searching a provider's full legal name rather than just its brand. Readers should evaluate how companies respond to disputes to determine if they transparently disclose the risks of credit damage and potential lawsuits.
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Debt Payoff Calculator: Find Your True Payoff Date
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Sponsored — Debt Relief Offers
Sources & Further Reading
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