What is a key benefit of debt consolidation?

One of the primary advantages of debt consolidation is that it typically lowers the interest rate on existing debts. This process involves combining multiple debts, often characterized by higher interest rates, into a single loan with a lower interest rate. By doing so, consumers can save money on interest payments over time, which can lead to more manageable monthly payments and often a quicker path toward debt repayment.

Reducing the interest rate not only helps decrease the total amount paid over time but can also free up cash for other essential expenses or savings. This is particularly beneficial for those struggling with high-interest debts, such as credit cards, as it provides a more sustainable financial solution.

The other options present benefits that may not consistently apply to debt consolidation. For instance, while paying off debt can improve a credit score over time, initially, consolidating debt may not result in an immediate increase in the score. Additionally, debt consolidation does not eliminate monthly payments; it restructures them. Immediate cash flow is not a direct benefit of debt consolidation since the focus is on managing and reducing existing debt obligations rather than increasing available cash reserves.