Debt consolidation.
In plain English
Consolidation replaces a pile of balances with a single loan: a personal loan, a balance-transfer card, or sometimes home equity. The honest wins are a lower blended rate, a single payment, and an amortizing loan with a real end date instead of revolving minimums. The catch is behavioral, and it has a name in credit counseling: freeing up the cards without changing the spending refills them, leaving the consolidation loan AND new card balances. Consolidation reorganizes debt; it doesn't reduce it.
01Why it matters
Done with closed or frozen cards and a budget, consolidation can cut years and thousands off a payoff. Done as a pressure-relief valve, it reliably doubles the problem, and the loan's marketing never mentions which version you're buying.
02The math, step by step
$12,000 across three cards averaging 26% APR, minimums barely moving principal. A 3-year personal loan at 12%: payment about $399/month, total interest roughly $2,350, done in 36 months, versus many years and far more interest on minimums.
03What this is NOT
Consolidation is not debt settlement (negotiating to pay less, with credit damage) and not a counselor-run debt management plan. And rolling unsecured card debt into home equity converts "they can ding my credit" into "they can foreclose."
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice