Debt consolidation is a financial strategy, merging multiple bills into a single debt that is paid off by a loan or through a management program.
Debt consolidation is especially effective on high-interest debt such as credit cards. It should reduce your monthly payment by lowering the interest rate on your bills, making it easier to pay off the debt.
This debt-relief option untangles the mess consumers face every month trying to keep up with multiple bills from multiple card companies and multiple deadlines. Instead, there is one payment to one source, once a month.
And it saves you money at the same time!
There are two major forms of debt consolidation – taking out a loan or signing up for a debt management program that doesn’t include a loan. It’s up to consumers to decide which one best suits their situation.
Debt consolidation is also referred to as “bill consolidation” or “credit consolidation.” By any name, consolidating debt effectively should get you out of debt faster and eventually improve your credit score.