Debt consolidation is the act of combining multiple debts—like credit card balances, personal loans, and medical bills—into a single, larger debt. This simplifies your financial life by reducing the number of monthly payments you need to make to various creditors to just one. Debt consolidation could even lower the overall interest rate on your debt, making it much easier and faster to pay off.
With US household debt reaching $17.69 trillion in Q1 of 2024, it’s important to understand how debt consolidation works. This guide tells you everything you need to know including the different types of debt consolidation, how to apply for it, and the main advantages and disadvantages.