Debt consolidation: when it helps, when it hurts

Debt consolidation is any strategy that rolls multiple debts into a single loan or payment. The theory is simple: one lower-rate loan replaces several high-rate ones, lowering your interest expense and simplifying payments. The reality is more nuanced — some forms of consolidation are legitimate savings, others just restructure the debt without helping.

Forms that can help

• Personal loan at a lower rate than your credit cards. If you can get a 9% personal loan to pay off 24% credit cards, the math is obvious.
• 0% balance transfer cards — great for 12–18 months if you can pay off the balance before the promo rate ends. Not a long-term solution.
• HELOCs or home equity loans — usually the lowest rates, but you're collateralizing your house to unsecured debt. High stakes.

Forms that usually don't help

• Debt consolidation loans at similar or higher rates. Nothing saved — just rearranged.
• 'Debt management' programs that negotiate minimums but charge monthly fees. Often net-neutral after fees.
• Consolidating federal student loans into private loans just to get one payment (burns protections).