Too many debts, too many due dates. There’s a fix for that

Canadians have accumulated a lot of debt.

Consumer debt reached a record $2.64 trillion in the second quarter of 2026, according to TransUnion, with the average non-mortgage balance rising 7.6 per cent year-over-year to $28,118.

For many households, the problem doesn’t arrive as one intimidating number. More often, it’s a stack of debt: the $9,000 credit card, the $14,000 line of credit, the $5,500 roofing loan, the $11,000 car loan, $850 in store financing and $600 in buy-now, pay-later payments. A mortgage or HELOC, possibly, on top of all that.

Suddenly you’re not just managing debt. You’re managing due dates, minimum payments and multiple interest rates every month. It’s overwhelming to track, let alone keep up. It might be time for your consolidation comeback.

Debt consolidation means combining several debts into one, ideally at a lower overall interest rate and with one manageable payment. Done properly, it can reduce interest costs, simplify your financial life and provide a clear path out of debt. Done poorly, you could end up owing even more.

Before consolidating anything, put the strategy through these four tests.

Test 1: Is the rate actually lower?

Don’t be seduced by the monthly payment. A collection of debt payments totalling $900 a month becoming one $550 payment sounds like immediate financial relief. But first, compare the interest rates and understand exactly how much interest you’ll pay.

Consolidating credit card debt charging 23 per cent or more into a significantly lower-rate product could produce meaningful savings. But don’t assume consolidation automatically means cheaper borrowing. If some of your existing debts already carry relatively low rates, rolling everything together could actually make some of that borrowing more expensive.

Compare the interest rate, fees and total estimated interest cost of your existing debts against the proposed consolidation. Ask the lender for the total cost of borrowing, then compare it with what your existing debts will cost if you continue your current repayment schedule. The goal isn’t simply one payment. It’s less expensive debt.

Test 2: When will the debt actually be gone?

A lower monthly payment can hide a longer repayment period. Stretching debt over additional years can mean paying more interest overall, even at a lower rate. That doesn’t automatically make a longer term a bad choice. If a lower payment gives an overwhelmed household the breathing room it needs to stop falling behind, that trade-off may be worth it. Just understand what that relief costs.

Ask for the payoff date. If your new payment is $500 a month, how many months will you make it? What will the total cost be by the time the balance reaches zero? A consolidation strategy should give you something revolving debt rarely does: an end date.

Test 3: What happens to the old credit?

Don’t just consolidate your payments. Consolidate your debt. This is arguably the most important test. Imagine consolidating $20,000 of credit card debt into a lower-interest loan. Your credit card suddenly has a zero balance and thousands of dollars of available credit again. That can feel like progress. But if you subsequently put $8,000 back onto the card, you haven’t solved a $20,000 debt problem. You’ve created a $28,000 one.

If having that newly available credit makes it too tempting to borrow again, consider reducing limits or closing unnecessary accounts. There can be credit-score implications to doing so — more on that below — but your first priority should be building a debt structure you can actually manage.

Test 4: What will consolidation do to your credit?

Consolidation can affect your credit profile in both directions. Applying for a new loan or line of credit generally involves a hard inquiry, which can nudge your credit score down in the short term. Opening new credit may also have an impact, so don’t panic if your score moves in the short term.

Think longer term. Payment history is the most important factor in your credit score, according to the Financial Consumer Agency of Canada. Consistently making your new payment on time, reducing what you owe and avoiding running your old balances back up will do more for your credit health than protecting it from any short-term dip.

Consolidation isn’t debt forgiveness. It reorganizes the problem so you have a better chance of solving it.

Before signing anything, know your new rate, total borrowing cost, payoff date and what you’ll do with your newly available credit. Compare offers carefully, but avoid submitting multiple credit applications just to see what rate you’ll get — each inquiry adds up.

And address whatever caused the debt to accumulate. If overspending or other financial behaviours were a factor, a qualified financial therapist or money coach can help identify the underlying pattern — and break it.

Because the consolidation comeback only works if there’s something at the end of it even better than one monthly payment: no payment at all.Test 3: What happens to the old credit?

Don’t just consolidate your payments. Consolidate your debt. This is arguably the most important test. Imagine consolidating $20,000 of credit card debt into a lower-interest loan. Your credit card suddenly has a zero balance and thousands of dollars of available credit again. That can feel like progress. But if you subsequently put $8,000 back onto the card, you haven’t solved a $20,000 debt problem. You’ve created a $28,000 one.

If having that newly available credit makes it too tempting to borrow again, consider reducing limits or closing unnecessary accounts. There can be credit-score implications to doing so — more on that below — but your first priority should be building a debt structure you can actually manage.

Test 4: What will consolidation do to your credit?

Consolidation can affect your credit profile in both directions. Applying for a new loan or line of credit generally involves a hard inquiry, which can nudge your credit score down in the short term. Opening new credit may also have an impact, so don’t panic if your score moves in the short term.

Think longer term. Payment history is the most important factor in your credit score, according to the Financial Consumer Agency of Canada. Consistently making your new payment on time, reducing what you owe and avoiding running your old balances back up will do more for your credit health than protecting it from any short-term dip.

Consolidation isn’t debt forgiveness. It reorganizes the problem so you have a better chance of solving it.

Before signing anything, know your new rate, total borrowing cost, payoff date and what you’ll do with your newly available credit. Compare offers carefully, but avoid submitting multiple credit applications just to see what rate you’ll get — each inquiry adds up.

And address whatever caused the debt to accumulate. If overspending or other financial behaviours were a factor, a qualified financial therapist or money coach can help identify the underlying pattern — and break it.

Because the consolidation comeback only works if there’s something at the end of it even better than one monthly payment: no payment at all.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.