Debt Consolidation

Consolidation borrows once to pay off multiple balances, leaving one payment, one rate, and one payoff date. The usual vehicles are an unsecured personal loan, a 0% balance transfer card, or a home equity loan or cash-out refinance.

It only saves money if the blended rate genuinely falls. Personal loan rates run from single digits for excellent credit to the high twenties for poor credit, and most carry an origination fee of 1% to 8% deducted from the proceeds — so a quoted rate below your cards' rates is not by itself proof of a win. The comparison that matters is total interest and fees over the new term against total interest on the current path.

Stretching the term is where apparent savings quietly disappear. Moving 22% card debt to a 12% loan while doubling the repayment period can lower the monthly payment and raise the lifetime cost at the same time. A lower payment is a cash-flow outcome, not a debt outcome.

Secured consolidation deserves separate thought. Rolling credit card balances into a HELOC or a cash-out refinance buys the lowest rate available, and it does so by converting debt your lender could only sue over into debt secured by your house. That trade is defensible with a stable income and a firm plan; it converts a survivable problem into a housing risk without one.

The behavioral failure mode is consistent enough to plan around: the old cards are now at zero, and the households that end up worse off are the ones that use them again. Consolidation restructures debt — it does not address what created it, and closing or freezing the paid-off accounts is usually part of making it stick.