You want one predictable payment.

You want lower interest.

You want a clear payoff date.

But the world of finance and lending is full of confusing terms, fine print, and frustrating "insider lingo." This guide explains debt consolidation in simple terms so you can make the best choice for your future.

Who This Is For

• Credit score usually 660–740.
• Consistent, verifiable income with DTI under ~40%.
• Pays minimums but principal barely moves.
• Uses credit for lifestyle and big purchases.
• Holds 4+ cards at 18–29% APR.

Learn more about our approach on the About page.

Debt Consolidation Glossary (20 Terms)

• Debt Consolidation — Combine multiple debts into one loan and one payment.
• Balance Transfer — Move card balances to a new card with a 0% or low intro APR.
• APR (Annual Percentage Rate) — Total yearly cost of credit including interest and some fees.
• Secured Loan — Loan backed by collateral like a home or car.
• Unsecured Loan — Loan with no collateral based on credit and income.
• Credit Counseling — Professional advice to review options and set a plan.
• Debt Management Plan (DMP) — Agency-arranged plan to lower rates and simplify payments.
• Debt Settlement — Negotiate to pay less than owed. Usually harms credit.
• Default — Miss required payments. Credit damage and collection risk.
• Collections — Creditor assigns or sells debt to a collector to recover funds.
• Principal — Amount owed before interest and fees.
• Interest Rate — Cost to borrow principal as a percentage.
• Fixed Rate — Rate stays the same for the full term.
• Variable Rate — Rate can move with market conditions.
• Credit Utilization — Balances divided by limits on revolving accounts.
• Hard Inquiry — New credit application check. Small temporary score drop.
• Soft Inquiry — Pre-approval or review pull. No score impact.
• Prepayment Penalty — Fee charged if you repay early. Avoid when possible.
• Debt-to-Income Ratio (DTI) — Monthly debt payments divided by monthly income.
• Amortization — Payment schedule that reduces principal and interest over time.

Next Steps

• List each balance, APR, and minimum payment.
• Estimate your blended APR and payoff timeline.
• Compare a personal loan vs. your current path.
• Prioritize a fixed rate and no prepayment penalty.
• Automate payments and avoid new revolving balances.
• See common loan uses if you want broader flexibility.

Ready to simplify your payments?

Check your rate and see your estimated savings.

No pressure. No jargon. Just numbers.

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FAQs

Will debt consolidation hurt my credit.

A new loan adds a hard inquiry and a new account.

That can lower your score a bit at first.

On-time payments and lower utilization can help over time.

Is consolidation the same as settlement.

No.

Consolidation replaces many debts with one new on-time loan.

Settlement tries to pay less than owed and usually hurts credit.

How do I know if consolidation is worth it.

Compare total interest on your current path vs. the new loan.

Check payment amount, term length, and any fees.

Pick the option with the lowest total cost that fits your goals.

Should I choose a secured or unsecured loan.

Unsecured protects your assets but may cost more.

Secured may lower rates but puts collateral at risk.

Choose based on risk tolerance and payoff discipline.