Use a credit card debt consolidation loan to squeeze debts into a single payment

Learn how to consolidate debt effectively so you can achieve stability.

Debt consolidation is the process of combining multiple debts into a single monthly payment. It’s often tied to interest rate reduction.  A good consolidation plan allows you get out of debt faster even though you may pay less each month. This allows you to regain stability faster and save your credit from damage caused by late payments and debt collections.

The articles in this archive all revolve around using debt consolidation to get ahead. They explain the latest tricks and trends in consolidation, so you can find relief without a hassle. Whether you have problems with credit cards, student loans or back taxes, debt consolidation may be the solution you need.

Calculating a debt settlement plan

Is Debt Management Or Debt Settlement Better For Me?

December 6, 2017 | Howard Dvorkin, CPA

A reader is deep in debt, but one plan is better than the others.

Paying off my debt means eating ramen all the time

How Can I Pay Off My Credit Cards Without Eating Ramen Noodles Forever?

September 20, 2017 | Howard Dvorkin, CPA

A reader wants to pay off his credit card debt, but he also wants to eat.

Graduates stare at a tsunami of student loan debt (illustrated)

Student Loans: Too Big to Fail? Or Too Much to Succeed?

June 1, 2017 | Brandon Ballenger

The “student loan crisis” is so massive, we can’t even comprehend it anymore.

A couple looks at their finances and struggles to decide if they should pay bills like credit cards or save for retirement

How Do We Save For Retirement And Pay All Our Bills?

April 19, 2017 | Howard Dvorkin, CPA

A reader wants to know how to survive “the sandwich” — without evicting his mother-in-law.

debt management plan

Ask the Expert: Are Debt Management Plans Legit?

April 12, 2017 | Howard Dvorkin, CPA

A reader wonders if the letters DMP are A-OK.

Find the right way out of debt

4 Things That Can Be Learned From China’s Debt Crisis

November 10, 2016 |

Learn these lessons and you can save more than China does.


6 Ways To Successfully Get Out Of Debt

October 19, 2016 |

These proven strategies can help you get back on track if you’re ready to take the next step.

student loan deferment

Ask The Expert: How Do I Deal With $120,000 In Student Loans?

March 23, 2016 | Howard Dvorkin, CPA

A reader is embarrassed she ran up this much debt – as a finance and accounting major.

Dealing with bankruptcy and credit card debt

Persels and Associates Was Supposed to Take Care of My Debt

January 21, 2016 | Steve Rhode

A reader calls one company for debt consolidation but gets sent to another — which lets him down.

What to make of new student loan proposals?

Ask The Expert: Why Can My Girlfriend Get Her Student Loans Fixed And I Can’t?

July 29, 2015 | Howard Dvorkin, CPA

A reader wants to know why student loan consolidation won’t work for him, but it does for her.'s founder and CPA Howard Dvorkin

Dvorkin on Debt: What Dentists And Debt Have In Common

July 13, 2015 | Howard Dvorkin, CPA

And no, it’s not that both are painful – although they can be if you don’t take care of yourself.

Dealing with bankruptcy and credit card debt

Get Out Of Debt Guy: I’m About to Lose Everything. Help!

June 25, 2015 | Steve Rhode

all can be overcome when the balance of income and expenses is adjusted in your favor.

negotiate your credit card debt

Ask The Expert: How To Negotiate Credit Card Debt

January 28, 2015 | Howard Dvorkin, CPA

A reader wants to know if she can haggle to reduce her credit card debt.

Debt consolidation

Ask The Expert: Is Debt Consolidation Bad For My Credit?

January 14, 2015 | Howard Dvorkin, CPA

A reader worries his debt-relief options will hurt more than they’ll help.

Does debt consolidation work?

Ask the Expert: What Are The Pros and Cons Of Debt Consolidation?

November 5, 2014 | Howard Dvorkin, CPA

A suspicious reader wants to know if he really needs professional help. He might not.

Do debt consolidation companies work?

Ask The Expert: How Do Debt Consolidation Companies Work?

October 29, 2014 | Howard Dvorkin, CPA

A reader wants to know if they’re legit.

The average student loan debt

Ask the expert: What is the average student loan debt?

September 24, 2014 | Howard Dvorkin, CPA

A reader wants to know if he’s a typical student loan sufferer.

Should you get out of debt fast or safely?

Ask the expert: Can I get out of debt FAST?

August 6, 2014 | Howard Dvorkin, CPA

A couple argues about how they should pay off their debts: slow and steady or all at once.

What are your debt options?

Ask the Expert: What are my debt options?

July 30, 2014 | Howard Dvorkin, CPA

An Army veteran can repair a Humvee with his eyes closed but struggles with how to become debt free.

10 key facts about debt consolidation

#1: This generally only works for specific types of debt, usually of the same type

There are debt consolidation solutions for credit card debt, federal and private student loans and back taxes. Consolidation isn’t typically used for secured loans, such as your mortgage or auto loan. Most unsecured types of debt – i.e. debts without collateral – can be consolidated.

In addition, you typically can only consolidate similar types of debt together. So, the consolidation plan you use for credit card debt would be separate from the one you use for student loans. And within student loans, some options only apply specifically to federal student loans.

With credit card debt consolidation, you can usually include unsecured personal loans, unpaid medical bills and even some payday loans in consolidation. However, this varies based on which consolidation solution you use.

#2: Consolidation is not a silver bullet

In other words, although debt consolidation can be a highly effective way to eliminate debt, it won’t work in every situation. In fact, if you use consolidation in the wrong circumstances, you can end up making your situation worse.

Here’s an example, let’s say you open a balance transfer credit card to consolidate your existing credit card debt. You will enjoy 0% APR for an introductory period right after you open the card. It lasts for 6-24 months, depending on your credit score. This allows you to eliminate debt interest-free.

However, if you don’t pay off the consolidated balance before the promotional period ends, you’re back to high interest charges. In many cases, the standard rate for balance transfers may be higher that the rates you had previously.

Always make sure that you have a credit score high enough to qualify for the rate you need to get relief. Also, make sure you can afford the monthly payments to successfully complete the plan your set out.

#3: You can usually re-consolidate

If you consolidate your debt and then run into trouble with repayment, you can usually re-consolidate. For instance, you can include credit card debt consolidation loans in a debt management program. You can also consolidate existing Federal Direct Consolidation Loans with a new loan or include them in a private consolidation loan.

The only type of debt where re-consolidation is frowned is tax debt. Once you consolidate multiple years of back taxes with an Installment Agreement (IA), the IRS expects you to stick to that agreement. It’s possible to re-consolidate with a new IA, but you may face additional penalties.

#4: Lower APR doesn’t apply to some forms of consolidation

One of the main goals with many types of debt consolidation is to reduce or eliminate interest charges. By lowering APR, you can accelerate how fast you can get out of debt, and because you pay what you owe in a more efficient way, you may even enjoy lower payments, too. This is the case with all forms of credit card debt consolidation, as well as private student loan consolidation.

However, this goal does not apply to federal student loan consolidation or tax debt. If you use a Federal Direct Consolidation Loan, they set the interest rate by taking a weighted average of your existing rates. So, the consolidated rate will be lower than some of your previous rate, but higher than others. With tax debt consolidation, any penalty interest that’s applied will generally remain unless you also go through penalty abatement.

#5: Successful consolidation usually avoids credit damage

Although some debt relief options like debt settlement damage your credit, consolidation usually doesn’t. In most cases, if you complete a consolidation plan successfully, you won’t hurt your credit score. In fact, consolidation usually improves people’s credit scores because it improves the two biggest factors used to calculate scores.

  1. By consolidating your debt, you ensure you can make all the payments on time. You avoid missed payments that create negative items in your credit report. You also build a positive credit history with each payment that you make on time. This improves your score.
  2. Consolidation allows you to pay off your debt, which improves your credit utilization ratio. That measure the amount of debt you hold relative to your total available credit line. Paying off debt decreases your credit utilization ratio, which is good for your credit score. Utilization is the second biggest factor in scoring models after payment history.

#6: Don’t run up new debt after you consolidate

A common mistake that people make with consolidation – particularly for credit card debt – is that they take on new debt too early. Here’s an example:

Let’s say you consolidate your credit card balances using a personal consolidation loan. This means you take out a low-interest loan, using the funds you receive to pay off all your credit card balances. That leaves only the low-interest loan to repay.

However, this creates the potential for you to quickly take on a large volume of new debt. All your account balances are zeroed out.  It can be really tempting to start charging again. But remember, the reason you consolidated is that you were having trouble paying off those balances. Running them up now means you wind up with the loan plus the new balances. You can end up with more debt to pay off, instead of getting closer to zero.

#7: Review your credit report after pay everything off

By law, you’re allowed to download free copies (no strings attached) of your credit report once every twelve months. You can get them through Once you finishing paying off your consolidated debt, you should review your reports thoroughly. Here is what you’re looking for:

  1. That all accounts you paid off are listed as current or paid
  2. That you don’t have any collection accounts that you missed or that got assigned to you even though they’re not yours
  3. That your credit history shows that you made all the payments on time – i.e. that there aren’t any missed payment notifications when you actually made the payment on time.