From high credit card balances to large personal loans to massive medical bills, carrying a financial liability can feel like a huge burden—even more so if you’re juggling several accounts. But relief doesn’t have to be out of reach.

The solution may just be debt consolidation, a process designed to simplify repayments and lower interest rates. Check out some of the top options for this strategy along with the general pros and cons. Considering these factors before you leap, especially with the help of a financial professional, can help you arrive at the best possible approach for your situation and needs.

What is debt consolidation?

Simply put, this tactic involves replacing multiple debts with a single catchall loan, which you then pay down gradually via a single monthly payment. Ideally, it would also have a lower interest rate and other superior terms. Here are three of the most common forms of debt consolidation available.

Balance-transfer credit card
Primarily intended to help with credit card debt, this first method enables you to transfer all your existing such balances to a new line of credit for easier management; you may even be able to move over personal, auto, student, and other types of loans as well. It’s most effective with a card featuring a zero-interest promotional period (e.g., eighteen months) as an introductory offer, saving you money on interest and possibly making it feasible to pay off the total amount within that timeline. Many also provide cash or points rewards for certain qualifying purchases and come with a low-to-zero annual fee. Just keep in mind that you will likely need a good or excellent credit score to qualify.

Fixed-rate debt-consolidation loan
Similarly with this solution, you would combine your various debts into one traditional loan with set repayment terms and a fixed, potentially lower interest rate. As is typical for most loans, the rate you qualify for will depend on factors like your credit score, income, and total amount borrowed. In other words, you could be offered an appealing rate, such as 7 percent, or one that could very well be worse than your current interest, such as 36 percent. However, this may still be an accessible strategy since you don’t need good credit to qualify.

Home equity options
If you’re a homeowner with good credit and sufficient equity (the value held in your property), you can borrow against it, consolidating your debts by essentially taking out a second mortgage on your home. One such program, a home equity loan, offers you up-front cash at a fixed interest rate, which you can use to pay down what you owe. An alternative, a home equity line of credit (HELOC), grants you a single credit line at a variable rate to utilize for debt management. While mining value from your home may present a viable avenue, though, approach it with caution since failing to pay could mean losing your house.

Potential benefits

If you’re weighing whether to pursue one of these forms of debt relief, consider these essential ways consolidation may improve your financial situation.

One debt responsibility
Naturally, the main benefit is only having to manage a single payment rather than multiple ones with various due dates, interest rates, and amounts. In turn, you can reduce your stress as well as your risk of missing deadlines, a mistake that can impact your credit score and result in costly fees, among other negative effects. Even better, many consolidation loans also come with a fixed repayment plan, generally between three to five years. This structure can provide a clear timeline for when you’ll be debt-free—unlike with other balances, which can drag on indefinitely if you only make minimum payments.

Lower interest
Many people opt for debt consolidation specifically to slash their interest rates, especially those hamstrung by high-percentage credit cards or retail buy-now-pay-later programs. By securing a lower rate, you’ll pay less in interest overall, shrinking the time it takes to zero out the principal and saving you money in the long run. Additionally, certain types of consolidation loans, like personal and home equity ones, allow you to lock in a fixed interest rate. This offers a predictability and stability you can’t get with variable ones, which may fluctuate frequently during the course of the loan.

Improved credit score
Consolidating high debts could help you reduce your credit utilization ratio: the amount of debt you’ve accumulated relative to your total credit limit. This is a key factor in calculating your credit score. Another is your credit history, so if moving to one payment better enables you to be more timely, you may see your score gradually tick up. And as this rating improves, you may qualify for even better debt-relief solutions.

Considerations before consolidating

While these strategies may put debt relief within reach, you should think carefully about your options, discussing the various approaches with a financial professional. After all, if you have a poor credit score, you may not qualify for a balance-transfer credit card or consolidation loan with low rates, which could leave you with higher interest than what you’re currently paying. Many consolidation loans also carry hefty fees, such as origination costs or home equity loan closing costs. These prices can eat into any potential savings you’re hoping to achieve.

When handled deftly, though, debt consolidation may be a powerful way to streamline your finances, reduce your interest rates, and simplify your repayments. Be diligent about the deadline and adhering to its exact terms, and you could begin regaining control over your financial life and eventually restore your sense of freedom.