Debt Consolidation Guide 2025

Debt consolidation combines multiple debts into one loan, ideally at a lower interest rate. It works best when you have good enough credit (670+) to qualify for a personal loan below your current average rate. Common methods: personal loans (8–22% APR, 2–7 year term), balance transfer cards (0% intro APR, 3% transfer fee), home equity loans (6–9% APR, but your home is collateral), and debt management plans through nonprofit credit counselors. Consolidation does not reduce what you owe — it restructures it. If the behavior that created the debt doesn't change, consolidated debt often gets supplemented by new balances.