If you’ve amassed a bit of debt in different places, it can make sense to look at consolidating your debt. There are a few reasons to do this: First, it’s simpler and easier to make one payment per month instead of several. Second, often you can get a better promotional interest rate on your consolidated credit than you have on your various existing strands of debt.

There are two main ways to consolidate bills — by using a consolidation loan or credit cards.

A Consolidation Loan From Your Bank

Consolidation loans are loans offered by banks specifically to take all your various strands of debt and consolidate them into a single payment obligation. A consolidation loan can make your debt more manageable with its single payment, which also might be lower than your original individual payments combined.

What’s more, you should consider the amount of interest and fees you’ll pay under the consolidation loan as well as the length of the loan as compared to what you’re currently paying. According to a CreditKarma survey, generally speaking, people with lower credit utilization ratios have higher credit scores. Interest rates on debt consolidation loans also may be lower than those on credit cards, so you can save money there if you aggressively attack your debt.

Still, a consolidation loan has some disadvantages. It may make more sense to just pay off your credit cards more quickly, rather than to take out a five-year consolidation loan, once fees are factored in. What’s more, you should consider the amount of interest and fees you’ll pay under the consolidation loan as well as the length of the loan as compared to what you’re currently paying. See what the monthly payment on a consolidation loan will be. If it’s more than what you’re currently paying on your credit cards each month, you may consider simply adding to those payments, rather than taking out the loan.

Finally, consider how you got into debt in the first place: your spending habits. Paying off your credit cards in one fell swoop with a consolidation loan might create the temptation to continue charging on the cards. It does no good to lower your credit utilization ratio by freeing up room on the card if you’re going to go out and run up new charges to fill in the gap. It’s imperative that you change how you spend money, in order to get control of your debt once and for all.

Consolidating Yourself With Credit Cards

If you’ve been making timely payments and your credit utilization ratio isn’t too high, you might want to consider spending more money on your debt and lowering your interest rates at the same time.

Here’s how it works: Wait for a credit card offer with a lower promotional APR than your current cards. If possible, try to get a card with a 0% promotional APR offer. Then transfer as much debt as you can onto that card, keeping in mind your credit limit, beginning with your highest-interest card. When using this strategy, be sure to know how long the promotional period on the new card lasts, to avoid surprises later.

The catch, once again, is that you also have to work to change the spending habits that got you into debt in the first place. You run many of the same risks doing this as you might with a consolidation loan: If you’re simply the type of person who uses whatever available debt you have, that’s not going to change just because you have a new credit card. You have to work on the underlying behavior as you pay down debt, or else you can end up in a worse situation than you started in.

To Consolidate or Not to Consolidate?

Consolidating or not consolidating requires first making serious changes in your lifestyle and spending habits so that you don’t just dig yourself into a deeper hole. It also requires a bit of math to see what your present course will cost you in terms of paying off the full balance and what an alternative course might offer in savings. Don’t forget to factor in any fees that might accompany a balance transfer or loan.

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