How?
- It can get rid of high-interest rates. See Debt Avalanche.
- You can have a new payment timeline. Shorter means fewer interest payments. Longer means lower interest rates. Pick your battle.
- Save on fees with fewer bank transactions.
When does it make sense to consolidate debt?
- When you are juggling multiple debts and it feels overwhelming, but you still have the means to make payments.
- When you are pushed to the edge but don't want to file for bankruptcy.
What are the cons of debt consolidation?
- Debt consolidation is a band-aid, not a cure. It helps those who aren't in too deep. But if you have a problem with money and are likely to get into debt again, this won't do much for you.
- Interest rates and payment timelines are up for negotiation. If you're a bad negotiator, there's not much you can do. You will get screwed over.
- Debt consolidation may be easy on your credit score, but don't think you'll go unscathed.