Sign On
  • Online Banking
    Sign On Form is Loading

After hearing about all of the debt consolidation options out there, you may be left wondering, "How should I consolidate my debt?" The process of debt consolidation is more intuitive than most may think — you borrow money at a lower interest rate than you're currently paying and then use that money to pay off your existing debts. The result is that you only have to manage and pay off one debt instead of several different ones while simultaneously cutting your interest payments and potentially lowering your monthly payment.

How Debt Consolidation Works

First things first, look at the interest rates and terms of your current debts. Compare the interest you're currently paying to lower interest rates available through consolidation, such as through personal loans, balance transfer credit cards, or through the equity in your home. Then choose a consolidation option that is more affordable than what you're currently paying.

Depending on the type of consolidation, you may choose to take out a loan or open a line of credit at the new, favorable interest rate. With a line of credit, you have continuous access to credit — such as a balance transfer to a more affordable credit card; the borrower can continue to borrow money at the lower rate in the future. For loans – like a personal loan - you receive a lump sum of cash, that you can use to simply pay off the original amount.

Whether it’s a loan or line of credit, use that money to pay off all of the debts you're consolidating. Once this step is complete, you no longer owe any money to those previous creditors. All previous debts can now be paid through one monthly payment. This also allows you to make payments at the better rate by saving money on interest.

When Should I Consolidate My Debt?

There are several factors that can help you decide if debt consolidation is the right choice for you. The first is if you're paying a significant amount in interest each month. No matter what type of debt you have, consolidating can lower your interest and make the repayment process more manageable. A few examples of the types of debt that can be consolidated are credit card accounts, auto loans, , medical debts, and/or a mortgage. Consolidating is a smart move whenever you're paying interest on these or other types of debt and a better interest rate is available.

It's also a good time to consolidate if you currently have multiple debts, like several different credit cards or different types of loans. Trying to keep track of different types of debt can be overwhelming. Consolidating takes multiple accounts and replaces them with a single account, giving you one easy monthly payment.

Finally, it may be a good time to consolidate your debt if you have months or years to go before your debt is paid off. It's worthwhile to consolidate when you still have many payments remaining because then you can reap the benefits of a better interest rate over a longer period of time.

How Consolidating Debt Can Benefit You

Consolidating debt offers some big advantages:

  • Savings: When you consolidate at a lower rate, you save money on interest. Try using a debt consolidation calculator to see how much consolidation can save you over time.
  • Faster Payoff: You can put the money you've saved in interest toward paying off your debt faster.
  • Less Stress: Consolidating gives you one easy monthly payment, so you don't have to juggle multiple accounts.

Debt consolidation can help you gain control of your finances and take you further on your journey to financial wellness. Since consolidation gives you one easy payment, it takes a lot of the worry and confusion out of paying off multiple debts. And because it could lower your interest and/or your monthly payments, it frees up money that you can use to build a nest egg, invest, or pay off your loan a little sooner. There are no one-size-fits-all methods for consolidating debt, and the process is tailored to fit your financial situation. Ask your lending specialist about which option is right for you.


This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

Call Us


TDD/TTY (Hearing Impaired):

Schedule an Appointment

Talk to a Branch Manager in your neighborhood.

Schedule an appointment now

Find a Branch or ATM