Which financial strategy is best for managing debt?

Consolidating high-interest debt into a lower-interest loan is an effective strategy for managing debt because it can significantly reduce the overall interest costs associated with borrowing. When a consumer consolidates their debts, they combine multiple high-interest debts into a single loan with a lower interest rate. This can lead to lower monthly payments and a clear, structured repayment plan. It also simplifies the management of debt, as the individual has fewer payments to keep track of, leading to reduced stress related to repayment.

This approach can be particularly beneficial for individuals struggling with multiple debts, as it allows them to focus on paying off a single loan rather than juggling several payments. Furthermore, lower interest means that more of each payment goes toward reducing the principal balance of the debt rather than just servicing the interest, which can accelerate the journey toward financial freedom.

In contrast, ignoring the debt only allows it to accumulate, leading to more significant financial problems over time. Paying only the minimum payments can prolong the debt repayment period and result in paying a lot of interest over time. Using credit cards to pay off other debts can create a cycle of accumulating more debt if not managed properly, potentially leading to financial instability rather than resolving the issues. Therefore, consolidating high-interest debt into a lower-interest