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by Jesse Campbell on December 30, 2013

girl considers a consolidation loan

Ask the Experts: Should I consolidate my debts?

I have 3 cards that total $25,000. Wouldn't it be better to consolidate the balances into one loan versus tackling one at a time? -Mary

Hi Mary,

This is a great question, and the answer is…probably.

In many cases consolidating those three cards into one payment is going to make things easier for you. There are, however, some circumstances where consolidation isn’t in your best interests. Here are some questions to ask yourself before you decide to consolidate.

Am I concerned about my credit score?

Assuming those three accounts are in good standing, closing all three and replacing them with a fourth, completely new account is going to hurt your credit score. That’s because the length of your credit history is a factor in your score, so closing those three established accounts will hurt, at least initially. 

Am I saving in the long run?

A lot of consolidation deals offer good introductory rates, followed by less than great rates once the introductory period has expired. Take the time to sort out how much interest you’ll pay on each individual account if you paid them separately, and then calculate how much your consolidation loan would cost you once it was paid in full. You can use our balance payoff calculator to help you get an accurate picture.

Can I handle the new payment?

Pushing all three debts into one loan means you’ll end up with one payment, which is good, but it could be a sizable payment. It should help simplify your budgeting, but it may cost you some flexibility. Be sure to draw up a new projected budget to see how the consolidated payment will impact you.

Once you’ve answered these questions you’ll probably have a pretty good sense whether or not a consolidation loan is right for you. Ultimately, a consolidation loan should help you achieve your financial goals. If you’ve looked at all the angles and believe that it will help you get where you want to be, then go for it.

Good luck!


cesar carrasco says:
July 06, 2016

If I was to consolidate my debt, would it hurt me from refinicing my house a year from now? Thank you

Nidia Vasquez says:
April 14, 2017

Tengo una credi card con Freedom vida chase y me quede sin trabajo me es imposible mandar solo el mínimo y que mi cuenta siga creciendo cada día más podría consolidarla

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