 TITLE: What Is Debt Consolidation? CONTENT: What Does It Mean to Consolidate Debt?\n--------------------------------------\nSay you have several forms of debt: credit card debt, and maybe an unsecured loan or medical bill. You're struggling to keep track of them, and the interest rates are sky-high. Debt consolidation allows you to merge them, or consolidate them, into a single loan or credit card, ideally at a lower interest rate. This means you'll owe one creditor instead of several, and your monthly payment might be lower due to the lower interest rate.\nThere are a few debt consolidation methods, but these are the two most common:\n*   **Balance transfer credit card**: With this method, you obtain a credit card with an introductory 0% annual percentage rate (APR) for a set period that's typically anywhere from 12 to 20 months. You then transfer your high-interest debts to this new credit card, where you temporarily will not owe any interest. The goal with a balance transfer card is to pay off all or as much of your balance as possible during this time before the higher ongoing interest rate kicks in.\n*   **Debt consolidation loan**: If you have good credit, you may be able to get a debt consolidation loan with a lower interest rate than your existing debts. You'll pay off your other debts with this loan, simplifying payments and ideally paying less over the life of the loan. When you qualify for a loan with a lower interest rate than your previous debts, more of your payment goes to the principal debt, allowing you to potentially pay down your debt much faster. END