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Debt Consolidation: A Solution for Gen-Xers


Debt is no stranger to many American households, especially for Gen-Xers. Learn how debt consolidation options can help Gen-X with Fifth Third Bank.

Debt is the “elephant in the room” for American consumers. The Federal Reserve reports that total household debt has now reached nearly $14 trillion, exceeding the levels recorded during the Great Recession.

While virtually all Americans have some debt, Gen-Xers—those individuals aged 36 to 51—are most affected. Not only are Gen-Xers more likely than either Millennials or Baby Boomers to have debt, they also carry more debt than any other demographic group.

The Generational Divide

A recent LightStream/Harris Poll produced a snapshot of consumer debt broken out along generational lines.


Who’s Carrying Debt?

How Big Is the Burden?
(non-mortgage debt)

Baby Boomers (ages 52 to 70)



Gen-X (ages 36 to 51)



Millennials (ages 20 to 35)




Why Gen-X?

Why are Gen-Xers particularly burdened by debt? Some individuals and couples at this stage of life feel financially squeezed by the competing demands of running a household, raising children, saving for major financial goals such as college and retirement, while also helping to support aging parents. This confluence of challenges has earned those in this middle stage of life the apt title of the Sandwich Generation.

Aside from the financial realities, Gen-Xers also tend to have strong feelings about managing debt, with 25% reporting a lack of confidence, and one-in-five seeing no way out of debt.

Further, Gen-Xers seem to lack knowledge about key debt management strategies such as debt consolidation. Half of the Gen-Xers surveyed had not considered debt consolidation, while 16% had never heard of the strategy.

Debt Consolidation: Three Benefits That Pay

Debt consolidation is a strategy whereby you take out a loan and use the proceeds to pay off multiple smaller loans or credit cards leaving you with just one “consolidated” payment each month. While the over-arching goal of debt consolidation should be to lower payments and speed the payoff period, there are other potential plusses that can enhance your financial life:

  1. Simplicity and greater control—downsizing multiple accounts into one streamlines the monthly bill-paying cycle, offering individuals better control over their debt.
  2. Lower interest rate—if you obtain a lower interest rate on a debt consolidation loan it could take years off your repayment schedule potentially saving you thousands of dollars to put to more productive uses.
  3. Improved credit score—while new credit applications and account openings can lower your credit score temporarily, consolidating separate accounts into one improves your chances of making on-time monthly payments which, over time, may improve an anemic credit score. Further, consolidating debt will lower your credit utilization ratio, or the amount of available credit that you use. Lower credit utilization is good news for your credit score (see sidebar for more on credit scores).

Secured vs. Unsecured Loans

One key to unlocking the benefits of debt consolidation lies in the type of loan you obtain—secured or unsecured. A secured loan requires you to “secure” repayment with something of value, such as your home as with a mortgage or your car as with auto loans. For this reason, secured loans may offer better interest rates because they represent a lower risk to the lender. By comparison, unsecured loans rely solely on your promise to repay and therefore typically require high credit scores to qualify.

If you are ready to consolidate your debt, there are debt consolidation options available.

Your Credit Score: Know Your Number

Knowing your credit score – and the practices that contribute to it—is vital for any plan to reduce debt. Think of your credit score like a grade point average, meant to rate the likelihood that you’ll repay a debt. To arrive at a score, each of the three major U.S. credit reporting agencies—Experian, TransUnion, and Equifax—compile credit reports on individual consumers. Credit reports comprise data points from creditors, including:

  • Payment history—missed or late payments.
  • Utilization ratio—how much of your total available credit you currently owe
  • Length of credit history—how long accounts have been open
  • New account openings
  • Types of credit used—home mortgage, car loan, credit cards, etc.

Each of these factors is rated variably, and the result of that calculation is a number ranging from 300 to 850—your individual credit score. Generally, a credit score of 700 and above is considered good; 800+ is excellent.

Scores vs. Reports

A credit score reflects how well (or poorly) you are managing the individual debts included in your credit report. U.S. consumers are entitled to free annual credit reports from the credit reporting agencies named above. You can request all three at

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