Definition
Combining several debts into one new loan or balance-transfer card, ideally at a lower rate with a single payment. It restructures debt; it does not reduce it.
Why it matters
Consolidation succeeds or fails on behavior, not math: a lower rate helps only if the freed-up cards stay unused. The classic failure mode is consolidating, then refilling the original cards and carrying both debts.
Example
Three cards totaling $12,000 at roughly 22% APR become one personal loan at 11% with a fixed three-year payment. Interest cost drops sharply, but only because the borrower also stopped charging the emptied cards.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.