05 Sep 2025 2 min read Tip

Debt Consolidation: Slash Debt Fast, Don’t Screw It Up

High APRs are killing your cash flow. Roll debts into one lower-rate payment, price the fees and term, and lock the cards until you’re 50% paid—or you’ll dig a deeper hole.

Debt Consolidation — one payment, lower APR. Price the fees and term, then lock the cards until you’re 50% paid.

Debt consolidation rolls multiple debts into one payment to cut interest and simplify your life. Done right, it’s a lifeline. Done wrong, it’s a deeper hole. Here’s how to nail it in today’s market.

The Steps

1) Know Your Numbers
List every balance (credit cards, medical, personal loans), APR, and minimum. As of 2025: average credit-card APR is ~21%; personal loans average ~21% across all borrowers, while well-qualified borrowers (~700 FICO, ~3-yr term) can land ~12–13%. If you’re paying more than that, you’re a consolidation candidate.

2) Check Your Credit (properly)
Pull your credit reports free at AnnualCreditReport.com; get your score from your bank/card app or a lender. 670+ unlocks better rates. Below that, expect higher pricing or consider secured options like a HELOC (recently ~8–9%, variable).

3) Pick Your Weapon

Personal loan (SoFi, LendingClub, etc.) – Unsecured, simple. Watch the origination fee (1–5%).
Balance-transfer card – 0% intro APR for 12–21 months if you can pay it off before the promo ends; expect a 3–5% transfer fee.
Home equity (HELOC / cash-out refi) – Lower rate potential, but your house is collateral. HELOCs are prime + margin and variable—stress-test at +2%.

4) Prequalify and Apply
Shop 2–3 lenders (soft pull where possible). Have income docs and ID ready. Choose the lowest APR (rate plus fees), not just the lowest headline rate.

5) Seal the Deal
When funded, pay off the old balances immediately (many lenders do it for you). Hard rule: no new revolving balances until the consolidation loan is 50% paid. Otherwise, you’ll stack new debt on top of old habits.

Real-World Math (quick)

$50,000 on cards at 22% costs ~$917/month in interest alone. Roll to a $50,000 HELOC at 8% over 10 years and the payment is ~$606/month—~$311 less—and you’re actually amortizing. (Reminder: HELOC is variable and secured by your home. Don’t over-borrow.)

The Takeaway

Consolidation works when you lock a lower APR and change behavior. Use calculators (e.g., Bankrate) to price fees, term, and break-even. For real-estate-backed plays, include closing costs (~2–6%) and equity risk. If your credit is rough or spending isn’t under control, do counseling first—not another loan.

The Closer

Consolidation can save thousands and simplify your life. But if you keep swiping, you’re not consolidating—you’re just rearranging deck chairs on the Titanic.

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Disclaimer: This is educational content, not financial advice. Consult a professional before borrowing. Subscribe for more no-BS finance.