What is Debt Consolidation and How Does It Work?

Yes! Debt Consolidation is a Smart Use of Personal Loans

What is Debt Consolidation?

Combining multiple debts (credit cards, other loans) into one single loan with a lower interest rate.

Benefits:

• Lower Interest Rate: Personal loans typically have lower rates than credit cards
• Single Payment: One monthly payment instead of multiple
• Fixed Term: Clear payoff date (unlike revolving credit)
• Credit Score: Can improve credit utilization ratio

Example:

Debt Type	Balance	Rate	Monthly
Credit Card 1	€5,000	19.9%	€150
Credit Card 2	€3,000	22.9%	€100
Other Loan	€4,000	15%	€120
Total Before	€12,000	-	€370
OCBC Loan	€12,000	5.99%	€230

Savings: €140/month and thousands in interest over the loan term!