Debt Management vs. Debt Consolidation: Which Is Better?

Debt management and debt consolidation are two paths to debt relief. Which is best for you depends on your circumstances

Sean Pyles
By Sean Pyles 
Edited by Kathy Hinson
Debt Management vs. Debt Consolidation: Which is Better?

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

Debt management and debt consolidation can both combine several balances into one with a lower interest rate. This can help you pay off debt more quickly and save you money.

The approach that's best you depends on your credit score and the type and amount of debt you have.

Debt management

A debt management plan rolls several credit card debts into one with a single monthly payment and a slashed interest rate.

The repayment plan usually lasts three to five years, and you typically can’t open new lines of credit or use credit cards during that time. The plans mainly address credit card debt, not student loans, medical bills or personal loans.

Why you would choose it:

  • You have primarily credit card debt

  • You have more debt than you can reasonably consolidate

  • Your credit score doesn't qualify you for the debt consolidation product you want, such as a balance transfer credit card or a debt consolidation loan

  • You want the external discipline the plan imposes to keep you from adding to your balances

Seek out a nonprofit credit counseling agency to get started with a debt management plan. Most agencies offer plans online or over the phone.

Get more financial clarity with NerdWallet
Monitor your credit, track your spending and see all of your finances together in a single place.

Debt consolidation

Debt consolidation rolls several debts into a single new one, ideally with a lower interest rate. There are a few ways to do it, including a personal loan, balance-transfer credit card, 401(k) loan or home-equity loan.

You’ll need good or excellent credit to qualify for the lowest interest rates on a personal loan or balance-transfer credit card.

Why you would choose it:

  • You can qualify for a lower interest rate than you’re paying now, which saves you money and can help you eliminate debt more quickly

  • You want to cut the number of payments you’re juggling

  • You can maintain access to credit while paying down debt