Let’s talk about debt consolidation

November 5, 2025

Feeling overwhelmed by multiple bills and high-interest rates?

Debt consolidation could help you take back control of your finances. By combining your existing debts into a single loan or line of credit – ideally with a lower interest rate – you may simplify your payments and save money over time.

Here’s what debt consolidation involves, how it works and when it might be a smart move for you.

The 411 on Debt Consolidation

Debt consolidation is the process of merging multiple debts into one loan or line of credit. Instead of juggling several monthly payments, you make just one, typically with a more manageable interest rate and term.

You can consolidate different types of debt, such as:

The goal? Simplify repayment, reduce interest and potentially pay off debt faster.

So, How Does Debt Consolidation Work?

Here’s a simple example:

Let’s say you have three credit cards with the following balances and interest rates:

Card Balance Interest Rate
A $2,000 22%
B $3,500 19%
C $1,500 24%

That’s $7,000 in total debt with an average interest rate of around 21.6%. If you qualify for a personal loan at 13% interest rate, you could consolidate all three balances into one payment – with one due date and one interest rate. That can lower your monthly burden and reduce the total interest you pay over time.

Explore your options: M&T Bank offers personal loans and lines of credit that may help with debt consolidation.

Is Debt Consolidation right for you?

Debt consolidation can be a powerful tool, but it’s not one-size-fits-all. Here are a few potential benefits and drawbacks to keep in mind:

Pros

  • Simplified payments: One monthly bill instead of many.
  • Lower interest rate: If your credit qualifies, you could save on interest.
  • Fixed repayment plan: A clear timeline to becoming debt-free.
  • Boost to your credit score: Reducing credit utilization may improve your score.

Cons:

  • Fees may apply: Watch for origination or balance transfer fees.
  • Qualification isn’t guaranteed: Approval may require strong credit or collateral.
  • Longer loan terms could cost more: A lower monthly payment may mean more interest over time.

Ask yourself the following:

  • Are you managing multiple high-interest debts?
  • Do you struggle to keep track of due dates?
  • Would a single, predictable monthly payment help?
  • Do you qualify for a lower interest rate than you’re currently paying?

If you answered “yes” to any of the above, debt consolidation may be worth exploring.

Tip: Use M&T’s Lending Calculator Library  to estimate how much you could save by consolidating your debt.

Popular Debt Consolidation Methods

There’s more than one way to consolidate debt. Your options might include:

1. Personal Loan

Borrow a lump sum to pay off existing debts, then repay the loan over time with fixed monthly payments. Learn more about personal loans and lines of credit.

2. Balance Transfer Credit Card

Move high-interest balances to a credit card with an introductory 0% APR. Be cautious… interest kicks in after the promo period ends.

3. Home Equity Line of Credit (HELOC)

Use your home’s equity to secure a line of credit with a lower interest rate. Explore mortgage and HELOC options.

Alternatives to Debt Consolidation

If consolidation isn’t right for you, consider these options:

  • Debt Snowball Method: Pay off the smallest balance first to gain momentum.
  • Debt Avalanche Method: Prioritize debts with the highest interest rate to save more over time.
  • Credit Counseling: A certified counselor can help you create a personalized payoff plan.

Not sure which to choose? Learn how to build a plan to pay down your debt in 3 steps.

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Take the First Step Toward Financial Confidence

Debt consolidation may help you turn a stressful situation into a manageable one. By reducing your interest rate and simplifying your payments, you can focus on what really matters: moving forward.

Explore your options with M&T:

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For educational purposes only. Always consult a qualified professional about your personal situation.