Is consolidating debt a good idea
Try a do-it-yourself debt payoff method instead, such as the debt snowball or debt avalanche.
If the total of your debts is more than half your income, and the calculator above reveals that debt consolidation is not your best option, you’re better off seeking debt relief than treading water.
You might qualify for an unsecured debt consolidation loan at 7% — a significantly lower interest rate.
For many people, consolidation reveals a light at the end of the tunnel.
In any case, the best option for you depends on your credit score and profile, as well as your debt-to-income ratio.
» MORE: 4 ways to consolidate debt Use the calculator below to see whether or not it makes sense for you to consolidate.
To do this, many or all of the products featured here are from our partners. It can reduce your total debt and reorganize it so you pay it off faster.
This could include changing your spending habits or seeking help from a financial planner to see what your options are.
Yes, you may be lowering your monthly payments, but that doesn’t mean that you’re paying less interest overall. Because making lower payments (even with a lower interest rate) may mean the term of your loan has been extended – so the amount of debt you have hasn’t lowered, and you’re taking longer to pay it off.
Not only will you be in debt for longer, but you may end up paying more in interest because of the longer loan term.
Readers also ask Consolidate your debt if you can get a loan at better terms and/or it will help you make payments on time.
Just make sure this consolidation is part of a larger plan to get out of debt and you don’t run up new balances on the cards you’ve consolidated. Debt consolidation can help your credit if you make on-time payments or consolidating shrinks your credit card balances.