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Debt consolidation loans vs. debt consolidation programs: What’s the difference?

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Debt consolidation loans and services are different products that serve different purposes.

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If you have a credit card, you’re not alone. In fact, the majority of adult Americans have at least one credit card in their wallets. Unfortunately, credit cards tend to have high interest rates coupled with a payment schedule that’s not necessarily conducive to a fast payoff. So, when you have credit card debt, you can feel like you’re stuck in a trap. 

If that’s the case, you’re likely considering debt consolidation, a popular debt relief option. However, as you dive into the concept, you’ll find that there are a couple of ways debt consolidation can work. It may be a new loan or it could be a program administered by debt relief experts

So, what are the differences between the two? Perhaps more importantly, which option is better for you given your unique situation? By understanding how each operates you’ll better be able to determine a path toward debt relief.

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Debt consolidation loans vs. debt consolidation programs: What’s the difference?

“Debt consolidation loans and debt consolidation services can be important when it comes to managing finances,” explains Derek Miser, investment advisor and CEO at Miser Wealth Partners in Knoxville, Tennessee. “However, there are distinct differences between both.” Here’s what you should know: 

What is a debt consolidation loan?

“Debt consolidation loans are used to specifically pay off debts,” explains Miser. “You can combine all debts into one loan. The debt consolidation loan will typically have a lower interest rate than your current debts.”

These loans don’t just save you money, they can make your debts easier to manage. After all, you’ll use them to consolidate multiple credit cards and personal loans into one, easy-to-manage account. The two most common types of loans consumers use to consolidate debts are: 

  1. Personal debt consolidation loans: These loans typically come with competitive interest rates when compared to credit cards and a fixed payoff plan, offering a clear path to payoff. 
  2. Home equity loans: Home equity loans may give you a way to access a significant amount of money at a competitive interest rate. As such, these loans provide a compelling way to consolidate high interest debt.   

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What is a debt consolidation program?

A debt consolidation program is a service that’s offered by a debt relief company. The process typically starts with a conversation between you and a debt relief professional. That professional will usually ask you questions about your income and expenses to get an understanding of your current financial position. 

Once they have all the information they need, representatives of the debt consolidation company generally contact your credit card lenders to negotiate lower interest rates and better payoff terms on your behalf. The next step is to set up an affordable, yet effective payment plan. 

Once this process is complete, you’ll start making your monthly payments to the debt consolidation company. The company will send payments to your individual lenders on your behalf until your debt is paid in full.  

Do debt consolidation loans hurt your credit score?

Debt consolidation loans don’t typically have a negative impact on your credit score, but they may have a positive impact. That’s because one of the factors that makes up your credit score is credit utilization. When you use a new loan to pay off your existing credit cards, your credit utilization score should improve. As such, your credit score may rise. 

Do debt consolidation programs hurt your credit score?

Debt consolidation programs may have a short-term negative impact on your credit score. That’s because debt consolidation programs use your financial hardship information to negotiate better terms. As such, your lenders will usually close your accounts, which may have a negative impact on your credit utilization ratio. 

Who is a debt consolidation loan best for?

“In order to obtain a debt consolidation loan, you will have to apply, which will require a credit check,” says Miser. “The terms of the loan will depend on your credit score.” The best rates and terms are usually reserved for those with the best credit scores and overall applications. So, this is often a strong option if you’re not falling behind on your debts but want a faster way to pay them off.

Who is a debt consolidation program best for?

Debt consolidation services use your financial hardship data to negotiate better terms on your behalf. So, these programs are typically best for borrowers who are having a hard time making their minimum payments and who don’t qualify for favorable debt consolidation loan interest rates. 

The bottom line

“Choosing between debt consolidation loans or services will ultimately depend on your situation and preference when it comes to handling debt,” explains Miser. He says, “you should do your research and speak with a financial professional before making a decision.” 



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Social Security Fairness Act passes U.S. Senate

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Legislation to expand Social Security benefits to millions of Americans passed the U.S. Senate early Saturday and is now headed to the desk of President Joe Biden, who is expected to sign the measure into law.

Senators voted 76-20 for the Social Security Fairness Act, which would eliminate two federal policies that prevent nearly 3 million people, including police officers, firefighters, postal workers, teachers and others with a public pension, from collecting their full Social Security benefits. The legislation has been decades in the making, as the Senate held its first hearings into the policies in 2003. 

“The Senate finally corrects a 50-year mistake,” proclaimed Senate Majority Leader Chuck Schumer, a Democrat from New York, after senators approved the legislation at 12:15 a.m. Saturday.

The bill’s passage is “a monumental victory for millions of public service workers who have been denied the full benefits they’ve rightfully earned,” said Shannon Benton, executive director for the Senior Citizens League, which advocates for retirees and which has long pushed for the expansion of Social Security benefits. “This legislation finally restores fairness to the system and ensures the hard work of teachers, first responders and countless public employees is truly recognized.”

The vote came down to the wire, as the Senate looked to wrap up its current session. Senators rejected four amendments and a budgetary point of order late Friday night that would have derailed the measure, given the small window of time left to pass it. 


Some seniors shut out of full Social Security benefits

02:20

Vice President-elect JD Vance of Ohio was among the 24 Republican senators to join 49 Democrats to advance the measure in an initial procedural vote that took place Wednesday.

“Social Security is a bedrock of our middle class. You pay into it for 40 quarters, you earned it, it should be there when you retire,” Ohio Senator Sherrod Brown, a Democrat who lost his seat in the November election, told the chamber ahead of Wednesday’s vote. “All these workers are asking for is for what they earned.” 

What is the Social Security Fairness Act?

The Social Security Fairness Act would repeal two federal policies — the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) — that reduce Social Security payments to nearly 3 million retirees. 

That includes those who also collect pensions from state and federal jobs that aren’t covered by Social Security, including teachers, police officers and U.S. postal workers. The bill would also end a second provision that reduces Social Security benefits for those workers’ surviving spouses and family members. The WEP impacts about 2 million Social Security beneficiaries and the GPO nearly 800,000 retirees.

The measure, which passed the House in November, had 62 cosponsors when it was introduced in the Senate last year. Yet the bill’s bipartisan support eroded in recent days, with some Republican lawmakers voicing doubts due to its cost. According to the Congressional Budget Office, the proposed legislation would add a projected $195 billion to federal deficits over a decade. 

Without Senate approval, the bill’s fate would have ended with the current session of Congress and would have needed to be re-introduced in the next Congress. 



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Saturday is the winter solstice and 2024’s shortest day. Here’s what to know about the official start of winter.

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The 2024 winter solstice, the shortest day of the year, happens on Saturday, Dec. 21, in the Northern Hemisphere. The celestial event signifies the first day of winter, astronomically. 

What is the winter solstice?

The winter solstice is the day each year that has the shortest period of daylight between sunrise and sunset, and therefore the longest night. It happens when the sun is directly above the Tropic of Capricorn, a line of latitude that circles the globe south of the equator, the National Weather Service explains. 

The farther north you are, the shorter the day will be, and in the Arctic Circle, the sun won’t rise at all. 

How is the day of the winter solstice determined?

The winter solstice occurs because of the Earth’s tilt as it rotates around the sun. 

When the Northern Hemisphere tilts away from the sun, the nights last longer. The longest night happens on the solstice because the hemisphere is in its furthest position from the sun. That occurs each year on Dec. 21 or 22. 

This year, it falls on Dec. 21 at 4:21 a.m ET, to be precise.

On the summer solstice, when the northern tilt is closest to the sun, we have the longest day, usually June 20 or 21.

Illustration of the Earth's tilt in different seasons
This illustration from the National Weather Service shows the tilt and rotation of the Earth on the winter and summer solstices, as well as the autumnal and vernal equinox marking the beginning of fall and spring.

National Weather Service


The solstices are not always exactly on the 21st every year because the earth’s rotation around the sun is 365.25 days, instead of 365 even. 

Will days start getting longer after the winter solstice?

Yes. Each day after the solstice, we get one minute more of sunlight. It doesn’t sound like much, but after just two months, or around 60 days, we’ll be seeing about an hour more of sunlight. 

When will winter officially be over in 2025?

The meteorological winter ends on March 20, 2025. Then, spring will last until June 20, when the summer solstice arrives. 

How is the winter solstice celebrated around the world?

Nations and cultures around the world have celebrated the solstice since ancient times with varying rituals and traditions. The influence of those solstice traditions can still be seen in our celebrations of holidays like Christmas and Hanukkah, Britannica notes.

The ancient Roman Saturnalia festival celebrated the end of the planting season and has close ties with modern-day Christmas. It honored Saturn, the god of harvest and farming. The multiple-day affair had lots of food, games and celebrations. Presents were given to children and the poor, and slaves were allowed to stop working. 

Gatherings are held every year at Stonehenge, a monumental circle of massive stones in England that dates back about 5,000 years. The origins of Stonehenge are shrouded in mystery, but it was built to align with the sun on solstice days

Winter Solstice at Stonehenge
People gather at sunrise for the winter solstice celebrations at the Stonehenge prehistoric monument on Salisbury Plain in Wiltshire, England, on Dec. 22, 2021.

Andrew Matthews/PA Images via Getty Images


The Hopi, a Native American tribe in the northern Arizona area, celebrate the winter solstice with dancing, purification and sometimes gift-giving. A sacred ritual known as the Soyal Ceremony marks the annual milestone.

In Peru, people honor the return of the sun god on the winter solstice. The ancient tradition would be to hold sacrificial ceremonies, but today, people hold mock sacrifices to celebrate. Because Peru is in the Southern Hemisphere, their winter solstice happens in June, when the Northern Hemisphere is marking its summer solstice.

Scandinavia celebrates St. Lucia’s Day, a festival of lights. 

The “arrival of winter,” or Dong Zhi, is a Chinese festival where family gathers to celebrate the year so far. Traditional foods include tang yuan, sweet rice balls with a black sesame filling. It’s believed to have its origins in post-harvest celebrations. 

Researchers stationed in in Antarctica even have their own traditions, which may include an icy plunge into the polar waters. They celebrate “midwinter” with festive meals, movies and sometimes homemade gifts.



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