Explore options to consolidate higher-interest debt
A debt consolidation personal loan may help simplify multiple monthly payments into one. Compare options carefully — not all borrowers will save money.
What is debt consolidation?
Debt consolidation combines multiple debts — such as credit card balances, medical bills, or other personal loans — into a single new loan with one monthly payment, ideally at a lower interest rate or with more manageable terms.
How a personal loan may help consolidate debt
A fixed-rate personal loan can replace several variable-rate revolving balances with a single predictable monthly payment. This may simplify your budget and, depending on terms, could reduce interest paid over time.
When it may make sense
- You qualify for a lower APR than what you currently pay
- You want a single fixed monthly payment
- You're committed to not running balances back up
- You want a defined payoff date
When it may not make sense
- The new APR is similar to or higher than current debt
- Origination or other fees outweigh interest savings
- A longer term increases total interest paid
- You may continue accumulating new debt
Credit card debt vs. personal loan repayment
Credit cards typically use variable APRs and minimum payments that can keep balances outstanding for years. A personal loan generally uses a fixed APR and an amortization schedule with a defined payoff date.
APR and total interest comparison
When comparing options, focus on APR (which includes certain fees) and total interest over the life of the loan — not just the monthly payment. A lower monthly payment with a longer term can mean more total interest paid.
Debt consolidation checklist
- List every balance, APR, and minimum payment
- Calculate your current weighted-average APR
- Compare it to the APR of any consolidation offer
- Include origination fees in your comparison
- Pick a term that balances payment with total interest
- Set up automatic payments to stay on track
A debt consolidation loan may help, could simplify repayment, and depending on eligibility and terms may lower interest costs. Not all borrowers will save money. Approval, rates, and terms are determined by participating lenders.