Debt consolidation is the process of bundling your various debts into a single debt. This might involve bundling loans together or borrowing a new loan to pay off credit cards and other debts such as a personal or car loan. Debt consolidation sometimes allows you to save money by moving all your debt into a lower interest loan that the average of the individual debts.
An important consideration with debt consolidation is that all your smaller debts are now one larger debt. You will no longer have the option of paying off the smaller debts one at a time, either by choosing the lowest amount owed or highest interest rate to tackle first. Consolidated debt becomes one payment and one interest rate that you must pay each month.