The Smart About Money website will be retiring on July 31, 2021. Learn more about this decision.

Search
Share

Debt Consolidation

Debt consolidation combines several debts into one new loan, often with more favorable terms for the borrower. After you speak with a credit counselor or a financial advisor, debt consolidation may be feasible to improve your debt management strategy. 

Some cautions when considering debt consolidation are:

  • You have to change your habits. It works only if you also will reduce your spending and credit purchases. 
  • Taking out a home equity line of credit to consolidate debts puts your home on the line. Think carefully before you do this.
  • Consolidating your debt can look like new debt on your credit history and can end up hurting your overall credit score.
  • The total interest cost of your debt may increase if payments are spread over a longer time period.
Course Home