Before we get into why you would consolidate your debt, let’s make sure everyone understands what debt consolidation is: Moving all of your current debt to fewer sources of debt. What that means to most people is using a loan (or even a credit card) to pay off their other debt.

Why would you consolidate your debt?

1) To Save Money
If you move debt to a lower interest rate, the cost of your debt will be less.

2) To Save Time
By reducing the number of debt accounts that you have, you’ll have fewer accounts to pay each month.

3) To Get Out of Debt Faster
By reducing your interest charges each month, consolidating could allow you to pay off your debt more quickly.

4) To Gain Better Terms
In addition to a better interest rate, debts are sometimes consolidated because of other favorable terms, such as a preferred repayment schedule or a fixed versus adjustable interest rate.