Debt consolidation means taking out a new loan and using it to pay off other debts. This entails combining several unsecured debts you may have into a single and larger piece of debt, for example credit cards, personal loans or medical bills, into one single bill that’s paid off with a loan.
The new loan usually has more favourable pay-off terms, for example, a lower interest rate, lower monthly payment or both.
Debt consolidation could be good for you if, you want to simplify the process of paying your bills; the one new loan should have a lower interest rate and monthly payment than the combined cost of the bills you consolidated.