The Pros and Cons of Debt Consolidation

Monthly payments. Due dates. Late fees. Debt can feel overwhelming — and it can be hard to keep up.

If you’re struggling with multiple bills, debt consolidation may be an option to consider. One way to consolidate debts is taking out a debt consolidation loan, a type of personal loan that allows you to take multiple debts and combine them into one loan with a fixed monthly payment.

Whether debt consolidation is a good option depends on your circumstances. We’ve rounded up some pros and cons of debt consolidation to help you figure out if it could be right for you.

Pros of debt consolidation loans

Depending on your circumstances, a debt consolidation loan may offer many benefits that simplify your financial life.

One monthly payment

Multiple due dates can be tricky to manage. Debt consolidation allows you to pay off several bills at once. So instead of juggling multiple bills and due dates, you’ll have just one bill to address each month.

Easier budgeting

A debt consolidation loan features a monthly payment amount and due date that remains the same as long as you pay off the loan as scheduled. This consistency can make budgeting easier.

Clear end date

Unlike credit cards, a debt consolidation loan has an end date. Since it’s an installment loan, you have a scheduled date for when the debt can be paid off, as long as you make your monthly payments on time.

Possible lower interest rate

The interest rate you get on a debt consolidation loan may be lower than the rate you’re paying on your existing balances, which means you can save money over time.

Could build credit

Just as paying credit card and other bills on time boosts your credit score, paying a debt consolidation loan on time may strengthen your credit score. By paying on time for the length of your loan, you can also increase your positive credit history.

Potential for lower payments

Depending on the term of your debt consolidation loan, your new monthly payment may be lower than what you’re paying for your individual debts each month.

Cons of debt consolidation loans

Before you move forward with a debt consolidation loan, make sure you consider possible downsides.

Potential for higher interest rates

Lower interest rates aren’t guaranteed, so be sure to compare the fixed interest rate on a debt consolidation loan to all the rates on your existing debts.

Potential longer repayment period

Although your monthly payment may be lower, your new loan may have a longer repayment term than your existing debt. In this case, you might end up paying more during the course of the debt consolidation loan. Take time to investigate how long it will take to pay back the new loan and its full cost at the end of the term.

Additional fees and costs

A debt consolidation loan may come with some additional costs, like an origination fee, which will add to your total loan amount, as well as application, prepayment and late fees. Take time to read the fine print and ask potential lenders about upfront and future fees.

May not solve underlying financial issues

If you consolidate your existing debts but continue to overuse your credit cards, your debt will likely keep growing. Making a budget and changing spending behaviors that contributed to your debt are key steps to taking control of your finances long-term.

When should you consider a debt consolidation loan?

Whether secured or unsecured, a debt consolidation loan might be a good fit if you:

• Have trouble making monthly payments on time: Consolidating several debts into one means you only have to remember a single monthly payment, not multiple due dates.
• Are unable to pay balances down quickly: If debt consolidation lowers your interest rate, then more of each payment goes toward your principal balance, paying it down faster.
• Feel overwhelmed by debt: A debt consolidation loan helps streamline your monthly bills, which often makes them easier to manage.

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Weigh your options before you consolidate

A debt consolidation loan can be a great way to provide you with breathing room while you simplify your finances. Like with all financial decisions, it’s important to ask questions and do your research to make sure you’re dealing with a credible lender. Take time to weigh the pros and cons of debt consolidation, and you’ll know if it’s the right decision for you.

If a debt consolidation loan seems like a potential solution for your financial needs, OneMain can help. Take a few moments to see if you have a prequalified loan offer.

This article has been updated from a previous posting on March 25, 2026. Jessica Leshnoff contributed.