Pros and cons of debt consolidation

American consumer debt – including mortgages, car loans, credit cards and student loans – reached $14.96 trillion in the second quarter of 2021, according to the New York Federal Reserve.

Some Americans are unable to manage the thousands of dollars of debt that they have, forcing them to explore other options rather than trying to chip away at an ever-growing mountain.

Some options for overcoming debt include working with creditors to settle the debt, using a home equity line of credit or getting a debt consolidation loan.

 Debt consolidation loans are used to pay off multiple debts and combine those monthly payments into one, sometimes at a lower interest rate. Although it sounds like an ideal solution, consider both the pros and cons of debt consolidation.

Debt consolidation is the process of combining two or more debts into a single larger debt. This step is often taken by consumers who are burdened with a significant amount of high-interest debt.