Master Debt


If you’ve already answered the question, “What is debt consolidation?” now it’s time to move on to when and if you should do it. Debt consolidation has a lot of advantages, but it isn’t always a good idea. The convenience of having only one monthly payment won’t be worth it if you’re paying more in the long run.

First, a quick recap:

How Does Debt Consolidation Work?

Debt consolidation allows a borrower to utilize a new lending option to pay off their existing debt. This may include credit card debt, student loans, or auto loans. Once the existing debts are paid off, the borrower will make one new payment a month at a new interest rate.

Should I Consolidate my Debt?

Consolidating debt may be a good idea if you fall into one of two categories:


If you’re unable to make the payments on your current debt, this could harm your credit score and lead to penalty fees for missing payments. Debt consolidation may be a way to lower your current monthly payments, although you may end up paying more in the long run.

Even if you are able to get a lower monthly payment, it’s important to be careful if you fall in this group. Consolidation could help, but it may only work as a short-term tool if there’s a larger problem related to overspending.


Your debt payments may be manageable, but your interest rates are high. Maybe your rates have increased over time, or your credit score wasn’t as good when you took out your existing debt.


If you fall into either of these groups, use this pre-consolidation checklist to help you make your decision:


Knowing your credit score is useful if you’re in either group. You can use to get your credit report for free once a year.

If you know your payments are too large for you to handle or if you’ve missed payments, your credit score might have dropped. Many debt consolidation options have credit score requirements, so knowing your current score can help you identify what options you might be eligible for.

Your credit score also can inform your new interest rate if you consolidate. If your goal is to lower your interest rate, you’ll want to make sure your score is in good shape, or have the opportunity to learn how to improve your credit score before moving forward with debt consolidation.


Seeing it on paper may not be fun, but it’s important to take the time to look at how much debt you want to consolidate. Remember, not all of your debt will be eligible! Write down:

  • The length of each loan
  • Your current monthly payment for each loan
  • Your current interest rate for each loan or credit card

Keep this information handy!


There are many options to consider when consolidating debt. There are debt consolidation specific companies, but tread carefully! They may try to take advantage of your situation by charging additional fees. Rather than going to a debt consolidation company that may end up costing you more in the end, consider one of these popular options:

Balance Transfer Credit Cards

You can transfer the balance from a credit card with a higher annual percentage rate (APR) to another credit card with a lower APR or no APR upfront, so this could be a good option if you’re planning to pay off your consolidated debt quickly. But the promotional rate will eventually expire, so be sure to verify what your APR will be after the promotional APR expires.

Home Equity Line of Credit (HELOC)

If you own your home, you could apply for a HELOC, which often have low interest rates. But if you are unable to pay off your debt, you could risk losing your home.

Personal Loans

One of the most common options for consolidation, personal loans offer predictable payments over time. Choose a bank that lets you lock in your interest rate to assist in future financial planning.

Once you know your options, it’s time to compare to see if it makes financial sense to consolidate, whether your goal is a lower monthly payment or a lower overall amount. Crunching the numbers can get complicated! Utilize an online calculator, like the “Should I Consolidate my Debt?” calculator available from Santander Bank. Enter all of the existing debt information you already wrote down, then enter details about the debt consolidation option you would like to pursue. The calculator will let you compare terms – both for your monthly payments and your overall amount – to help you determine if debt consolidation is a good idea.

Personal Loans for Debt Consolidation

If you think it’s time to consider consolidating your debt, you can apply for a personal loan online from Santander Bank. If you’re still unsure if it’s the right idea for you, stop in at a branch location to discuss further.

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