Debt consolidation: when it helps, and when it just moves the problem

What consolidation is

One new loan pays off several debts, leaving a single payment. It simplifies admin and can lower your rate. It does not reduce what you owe.

The three conditions

Consolidation makes sense when all three are true:

1. The new rate is genuinely lower than the weighted average of your current rates. 2. The term is not much longer — a lower monthly payment over more years can cost more overall. 3. You will not re-use the cleared cards.

Miss the third and you end up with the loan *and* the balances.

Compare total cost, not monthly payment

Total cost = monthly payment x number of months + fees. That is the only fair comparison. Model your current debts in the debt payoff calculator first, then compare with the loan offer.

The alternatives worth checking

• Avalanche method — no new borrowing, target the highest rate. See snowball vs avalanche. - Balance transfer — for card debt you can clear inside a promo period. - Talking to the lender — hardship arrangements and reduced-interest plans exist and do not require new credit.

Watch for

Fees rolled into the balance, secured loans that put your home at risk, and any upfront-fee "debt help" service.

Whatever you choose, track it

MoneyQuilt keeps every balance, rate and payment in one place so you can see whether the plan is actually working month to month.