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Glossary Finance

Debt consolidation

Debt consolidation replaces several debts with a single new loan, ideally at a lower interest rate or with a simpler payment.

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In more detail

It helps only if the new APR is below the weighted average of the old ones, fees are small and the term is not stretched so far that total interest rises.

Try these tools

Debt Consolidation Calculator

Compare paying off several existing debts separately against rolling them into a single consolidation loan.

See also

  • Glossary APR
    APR (annual percentage rate) is the yearly cost of borrowing, expressed as a percentage, that includes the interest rate plus certain fees.
  • Glossary Debt avalanche
    The debt avalanche is a payoff strategy that puts all extra money on the debt with the highest interest rate first.
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