Consolidation vs refinancing (first half). Debt consolidation’s core idea is combining multiple debts into a single new loan or payment stream. That might be a personal loan used to pay off several credit-card balances, or a debt-management plan that routes all payments through a single servicer. The main immediate benefits are simplicity (one payment, one due date) and potentially a lower combined monthly payment if the new loan has a longer term or lower rate. It’s not identical to refinancing, which replaces one existing loan with another (e.g., refinancing a mortgage or car loan) to change rate or term.

Practical tradeoffs and what to evaluate (second half). When considering consolidation, evaluate the new loan’s APR, origination fees, term length, and whether secured collateral is required (which increases risk). Consolidation that extends the term can reduce monthly strain but raise total interest paid; consolidation that lowers APR can reduce both monthly payment and total interest. Also consider whether any accounts will be closed or remain open (which affects utilization) and whether the consolidation lender reports to credit bureaus in ways that affect credit mix. Choose consolidation when it meaningfully improves manageability or total cost, not just appearance.