Consolidation

Debt consolidation can come in a few different forms and is probably the commonly thought of approach to dealing with debt. The theory is simple—combine several debts into one single account, ideally with a lower interest rate.

Putting it into practice can be complex. There are ways to consolidate debt on your own, such as through balance transfers that may, or may not, support all of your debt, from a consolidation loan from a traditional bank with difficult credit standards to a Debt Management Plan from a non-profit credit counseling agency. Consolidation is not meant to eliminate interest or save you on your principal balances. You will still repay the full balance, plus some interest. You benefit from having one predictable monthly payment that should be a bit lower and more manageable.