When you’re trying to get out of debt, it can be difficult to determine which strategies may work best for you. Debt consolidation means rolling several debts together into one new loan or line of credit, and it is a helpful strategy for many people. It may seem counterintuitive to take on new debt to reach your goal of getting out of debt, but in many situations, debt consolidation works. 

Is debt consolidation the right strategy for you? It might be, if you meet one of these four criteria: 

·       You are making several debt payments each month.

·       You want to decrease the amount of interest you’re paying.

·       You want to make one payment to cover all your debt.

·       Your debt is keeping you from reaching other financial goals. 

In each of these situations, debt consolidation may be the right strategy. Here's why and how it can work. 

You are making several debt payments each month.  

If you’re making several different payments to creditors every month, that can get confusing and exhausting. With several payments to make each month, it’s easy to miss one or make a late payment on another. Even if you’re using automatic payments, you have to make sure you have the money in your account to cover each one when the time comes.

Debt consolidation can eliminate these hassles. It allows you to make one payment each month to cover all your debt. You no longer have to keep up with all the different accounts, interest rates and payment dates. You simply make one payment each month and your debt is covered. When that loan or line of credit is paid off, you’re finished. 

You want to decrease the amount of interest you're paying.  

If you have several credit cards or personal loans, you may not even realize how much interest you’re paying because every note has a different interest rate. In many cases, a large portion of each debt payment is going towards interest every month. By rolling all those various debts into one loan or line of credit with a lower interest rate, you may be able to save a lot of money.

You have various options for acquiring credit with a lower interest rate, such as a credit card balance transfer, an unsecured personal loan, home equity line of credit (HELOC) or a mortgage refinance.

If you can find a credit card balance transfer that offers 0% APR for a lengthy period of time, that may be a good option. Find out whether there is a fee for the balance transfer and how much it is. If the fee is small or if there is no fee, you may be able to leverage the offer to pay for your current debt that has a higher interest rate. This method allows you to temporarily reduce your monthly financial burden and delay the debt repayment. If you can pay off the balance before the offer expires, you could potentially lower the total interest.

An unsecured personal loan could be another good option if you’re paying interest on a large credit card balance. Not only could a personal loan lower the total interest, but it also comes with one fixed monthly payment, making it easy to manage. 

Consider a HELOC if you own a home, as it allows you to borrow against the equity in your home at an affordable rate. Since a HELOC is secured by your home, the interest rate is usually lower than the unsecured loans or lines of credit. Many HELOCs allow you to pay interest only during the draw period, which may temporarily relieve your monthly financial burden. To pay off the debt faster, try paying principal and interest or lock in an affordable fixed rate.

Or, consider a cash-out mortgage refinance, in which your current mortgage is replaced with a new one that provides you with an additional lump sum of funds to use. You can use these funds to pay off higher-interest debt. Be advised that for the HELOC and cash-out mortgage refinance options the borrower's house would be used as collateral to secure the loan/line of credit

You want to make one payment to cover all your debt.  

Simplifying your life can make a difference in your stress level and your emotional health. And managing numerous debt payments every month is anything but simple.

When you roll multiple debt payments into one easy monthly payment, you can simplify your financial management.

Your debt is keeping you from reaching other financial goals.   

When a large chunk of your income is tied up in making debt payments every month, that can prevent you from building an emergency savings account, buying a home, or meeting other financial goals.  

High debt balances may also keep you from accessing other credit, because it might lower your credit score. Consolidating various debts into one and consistently paying down the balance may have a positive impact on your credit score. A higher credit score can help make it possible for you to be approved for new credit and may help you meet other financial goals.

By consolidating your debt and making one monthly payment, it’s easier to build a predictable monthly budget and work toward getting out of debt, so that you can focus on other financial goals. 


Visit our Lending Calculator Library page. Our debt consolidation calculators can help you decide if debt consolidation is right for you. Lending Calculator Library | M&T Bank (

Explore our lending options to find out which solution works best for your financial situation. Personal Mortgages & Loans | M&T Bank (

This article is for informational purposes only. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. Please consult with the professionals of your choice to discuss your situation.

All loans and lines of credit are subject to credit approval. Additional terms and conditions may apply, depending on the type of collateral and other terms offered or chosen.