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Product Spotlight: Debt Consolidation Solutions

By: Holly Benedetto01.27.22
Blog Product Spotlight Debt Consolidation

In this series, we analyze the various product offerings at American Heritage to explain their benefits and uses. Taking either a product-first or problem-first approach, we aim to deepen your understanding of banking products and services for robust financial literacy.

Debt can be one of the biggest financial obstacles that keep dreams just out of reach. Reducing debt requires a well-thought-out strategy, self-discipline, and the right tools.

Debt consolidation is a process in which multiple debts are combined into a single payment. Benefits of debt consolidation can range from reducing the number of individual payments to paying less over time with a lower interest rate. There are several ways a borrower can consolidate their debt, and some solutions are more suited to certain debts than others.

If you’re considering debt consolidation as a tool for your financial situation, continue reading to see which method is best for your needs.


The Problem

Paying high amounts of interest quickly chips away at your income and can impact your ability to save for the future. Plus, making multiple payments at different points during the month can be confusing and exhausting. Debt consolidation can help with both matters, allowing you to make fewer, potentially lower-interest payments. That puts you one step closer to achieving your financial goals!

The most commonly consolidated types of debt are high-interest credit card debt, student loans, and personal loans, but these are not the only options. These forms of debt often come with a high APR (Annual Percentage Rate) and significant balance, which makes them ideal for consolidation.


The Benefits


Added Savings

The money you potentially save on interest payments can be put towards a savings account, emergency fund, or other long-term goal. Take advantage of special low rates or even 0% introductory rate promotions when transferring a balance. You could save hundreds in interest each month on high-balance, high-APR debt. That means more money towards your goals.



Simplify your life with fewer payments and monthly statements. Spend less time paying bills and reduce the risk of forgetting to make a payment with consolidated loans.


New Features

When choosing a credit card to consolidate debt, you can get new perks alongside your balance transfer like rewards points, identity theft protection services, or extended warranties on purchases. 


Improve Your Credit

Making timely payments is a crucial factor in a good credit score. Fewer payments to make means fewer opportunities for missed payments. Improve your financial health and maintain your credit by making smart decisions that help your credit score.


The Tools

There is no one-size-fits all solution to debt consolidation – even better, there are multiple solutions that fit diverse needs. Check out the products below to compare how each product satisfies the needs of different borrowers.


Method Best for consolidating… Keep in mind…
Personal Loans
  • Debt from various high-interest sources, other personal loans
  • Make sure any debts you consolidate into a personal loan have a higher or equal APR to avoid paying additional interest
  • Weigh the term length and payment amounts for both loans; a longer term may mean lower payments, but more interest over time
Credit Cards
  • Multiple high-interest credit cards, store cards
  • Carefully read any terms regarding special introductory rates, term limits, or changes over the life of the balance
  • Address the cause of any credit card debt, as debt consolidation won't fix spending habits
Home Equity Loans
  • Student loans and other large debts
  • Using your home as collateral is not a matter to be taken lightly
  • To avoid risk, understand the impact that defaulting on this type of loan could have on your future finances and credit



The Verdict

Still weighing your options when it comes to debt consolidation? Try our debt consolidation calculator to see how much you could potentially save.

Depending on your situation, debt consolidation may be the first step towards bettering your financial wellbeing and creating healthier borrowing habits. If you’re feeling overwhelmed or stressed about finances, it can impact your overall wellness in other areas of life. We’re here to help – visit your local branch or contact us online to get started.



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