Should You Consolidate Your Loans and Credit Cards to Get Out of Debt?

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Should You Consolidate Your Loans and Credit Cards to Get Out of Debt?

People go into debt for many different reasons, and sometimes those reasons can seem absolutely necessary, especially if that person has never been taught to responsibly handle money (that would be me!). I’d dare to say that most of the time, we go into debt as a way to keep up appearances or simply because we aren’t mature enough to say no when we want something, knowing full well we don’t have the cash to buy it.

Whether you went into debt for an emergency or simply because you were taught it’s a normal part of life, there is a way out, but is debt consolidation the answer? Sometimes, yes, it is. But most of the time, I wouldn’t suggest or recommend it.

In today’s post, I’m going to talk about what debt consolidation is, and list the pros and cons, as well as talk about what I think is the absolute best and quickest way to get out of debt.

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What is Debt Consolidation?

Debt consolidation is the combining of debts in order to pay off debt faster. However, it doesn’t usually work that way.

Credit card companies will often offer an introductory lower interest rate to lure you in, but you have to keep in mind that these lower interest rates don’t last long. You also have to pay off the balance of the debt transfer before the introductory rate expires. If you don’t, the interest rate goes up (oftentimes WAY up), and you could even be subject to paying BACK INTEREST. This is where it’s important to read the fine print.

Most banks offer debt consolidation loans. Like credit card companies, they offer lower interest rates, but the term of the loan is often a lot longer, keeping you in debt and subsequently requiring you to pay more in interest over the life of the loan.

I’ll admit that we’ve actually done this before. I’ll also admit that it didn’t help us. We had multiple maxed-out credit cards, so I reached out to one of the loan officers at the bank where I worked, and she drew up a loan for me. It was great in the beginning because we only had one loan, and the payment was much lower.

However, I soon realized what a mistake it was. We still had our credit cards open, and we hadn’t worked on our financial behavior at all, so guess what happened to those credit cards. You guessed it. We maxed them out again while still paying on our debt-consolidation loan. If you really want to get out of debt for good, you have to work on your money habits.

Pros and Cons of Debt Consolidation


  • It pays off debts quickly.

  • You only have one monthly payment instead of several.

  • The payment is typically lower.

  • The interest rate is typically lower for banks, and credit card companies offer an introductory low rate.


  • You still have open credit cards available, which can easily be maxed out again if you’re not disciplined.

  • You have a longer term, keeping you in debt longer.

  • You will pay more in interest, double in most cases, because of the longer term.

  • No change in financial behavior (the real issue).

Should You Consolidate Your Debt?

In some extreme cases, like avoiding bankruptcy, yes, I think debt consolidation is the way to go, but for most people, it’s a trap. This is how credit card companies and banks make their money. It may seem too good to be true, and chances are, it definitely is.

The Best Way to Pay Off Debt

In my opinion, the absolute best way to pay off debt quickly is the debt snowball method. It’s the method we are using to pay off our debt, which is a journey we started last October.

How to do the Debt Snowball Method

  • Make a list of all debts from smallest to largest.

  • Make the minimum payment on all debts except the first (smallest) one.

  • Determine how much extra money you can throw at your smallest debt payment each month. Any amount you can do is great!

  • When that first debt is paid off (yay!), add the total you were paying toward your first debt payment to your second-smallest debt’s minimum payment.

  • Repeat on the third debt when the second debt is paid off, and then move on to the next.

You’ll notice your payment to the smallest debt getting bigger and bigger each time you pay off a debt, but you’ll be paying the same amount each month. This is why it’s called the snowball method.

Read: The Fastest Way to Pay Off Debt - The Debt Snowball

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I think the debt snowball method is great because not only does it pay off debts quickly, it also gets you to work on your money behavior, which is the real issue if we’re being honest with ourselves. At least that’s the case for us and many others like us.

Again, debt consolidation should only be used in necessary circumstances and only if you’ve read the fine print and determined it’s the best thing for your particular situation. Otherwise, the debt snowball method is a fantastic way to help you get out of debt and reach your money goals.

Have you used the debt snowball method to get out of debt? I’d love to hear about it in the comments below!