If you are juggling balances on three or four credit cards, each with its own due date, minimum payment, and interest rate north of 20%, you already understand the problem debt consolidation is built to solve. Americans owe a collective $1.26 trillion on their credit cards as of mid-2026, close to an all-time high, and roughly 60% of cardholders carry a balance from one month to the next. Consolidation is one of the most common ways people try to break that cycle, and done right it can save thousands of dollars in interest.
Debt consolidation is the process of combining several debts into one new loan or credit line, ideally at a lower interest rate, so you make a single monthly payment instead of many.
The debts most people consolidate are unsecured balances like credit cards, medical bills, and older personal loans.
You take out one new loan large enough to cover them all, use it to pay each balance off, and are left owing only the new loan.
The goal is not to erase what you owe but to make it cheaper and simpler to pay back.
