How to Consolidate Your Credit Card Debt: 5 Simple Ways

Credit cards often come with higher interest rates than other forms of consumer debt, making them difficult to pay off. Fortunately, credit card consolidation is a way to make managing credit card payments easier. Follow along to learn the best ways to consolidate your credit card debt.

Here are your 5 best credit card debt consolidation options

This strategy, which combines multiple credit cards into one, could mean reduced interest rates, lower monthly payments and more manageable debt.

The five best options are:

  • Debt consolidation loan or credit card consolidation loan
  • Credit card balance transfer
  • Mortgage refinance, home equity loan, or HELOC
  • Debt settlement
  • Debt management plan

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1. Debt consolidation loan or credit card consolidation loan

Debt consolidation or credit card consolidation loans are a type of personal loan. It can be used to combine different types of unsecured debts, including medical bills and credit cards.

These loans must be repaid in installments, usually every month. Most are unsecured, meaning the borrower does not have to put up collateral to qualify. Funds may also be available as soon as the next business day after the application is approved.

The average credit card interest rate is 16.45%, but getting a much lower interest rate on a consolidation loan is possible. For borrowers with good credit (690+ FICO score), the interest rate may be in the single digits (9.00% or less). However, borrowers with a lower credit score may not qualify for an interest rate lower than their credit cards.

Eligibility for a consolidation loan depends on several factors, including debt-to-income ratio (DTI), income, and credit score. Before applying for a loan, it’s a good idea to try to prequalify. This won’t affect your credit score, but it can give you an idea of the loan amount, interest rate, and terms you could get.

A debt consolidation loan should be large enough to cover all of your monthly payments. However, the new monthly payment will still need to be manageable for you to avoid future debt. Remember that some lenders charge additional fees, such as an origination fee or a prepayment penalty. These can add up if you’re not careful, so calculate them into the total loan cost before signing anything.

Top personal loans

Many online lenders and brick-and-mortar banks offer loans to consolidate credit cards and other consumer debts. Each lender has its eligibility requirements, rates, and terms. Some lenders even offer consolidation loans for borrowers with bad credit. Repayment terms are often flexible, but not always.

Before applying for a loan, shop around to find the best one for you. If your credit is less than ideal, check with your local banks or credit unions to see what they offer.


Upstart is an online lender that works with traditional financial institutions, such as credit unions and banks, to provide loans. Unlike other lenders, Upstart uses nontraditional factors in determining a borrower’s eligibility, such as their current income and education level.

A debt or credit card consolidation loan through Upstart requires a few things, including:

  • 6+ months of verifiable employment with a steady income
  • 18+ years old
  • Active banking account with a US-based financial institution
  • 300+ credit score (670+ for competitive rates)

Here’s a standard loan through Upstart:

  • Loan terms: 3 to 5 years
  • Borrowing amounts: $1,000 to $50,000
  • Fixed-rate interest: 5.40% to 35.99%
  • Prepayment penalties: None

Once approved, Upstart typically disburses the funds on the next business day.


Upgrade’s personal loans range from $1,000 to $50,000 and can be funded as soon as the next business day. Upgrade offers is available to borrowers in all states except Iowa, West Virginia and Washington, D.C.

Upgrade takes many factors into account when considering loan eligibility, such as your credit score, credit usage and history. In addition, you’ll have to pay an origination fee. However, the low credit score requirement can make it an ideal debt consolidation option.

A personal loan through Upgrade requires:

  • U.S. residency or a valid visa
  • A minimum credit score of 560
  • 18+ years old (19 years old in Alabama and certain other states)
  • A verifiable bank account
  • A valid email address.
  • Loan terms: 24 to 84 months
  • Borrowing amounts: $1,000 to $50,000. Georgia borrowers must borrow a minimum of $3,005. Massachusetts borrowers must borrow a minimum of $6,400.
  • Fixed-rate interest: 8.49% to 35.97%
  • Prepayment penalties: None

All Upgrade personal loans have a 1.85% to 8% origination fee, which is deducted from the loan proceeds. The lowest rates require autopay and paying off a portion of existing debt directly.


SoFi is an online lender that offers different financial products, including debt consolidation loans, student loan refinancing, lines of credit, and traditional banking services. To get a loan through SoFi, you’ll need to meet the minimum requirements:

  • 650 to 680 credit score
  • Steady source of income
  • U.S. residence
  • 18 years or older
  • Low debt-to-income ratio

Here’s a standard loan through SoFi:

  • Loan terms: 3 to 7 years
  • Borrowing amounts: $5,000 to $100,000
  • Fixed-rate interest: 6.99% to 22.23%
  • Penalties: No origination, late, or prepayment fees

Marcus by Goldman Sachs

Marcus by Goldman Sachs is an online bank and FDIC member. It’s known for its high-yield savings accounts, certificates of deposit (CDs), and personal loans. Eligibility requirements include:

  • 18+ years old
  • Active US checking account
  • Social Security Number or another form of identification
  • Verifiable income
  • 660+ credit score

Here’s a standard loan through Marcus by Goldman Sachs:

  • Loan terms: 3 to 5 years
  • Borrowing amounts: $3,500 to $40,000
  • Fixed-rate interest: 6.99% to 19.99%
  • Penalties: None

2. Credit card balance transfer

A balance transfer is when you take the existing balance from one credit card and move it to another credit card. Some credit cards come with a lower annual percentage rate (APR) and can save you money in interest payments. A few have a 0% APR promotional period that lasts 12 to 18 months, on average. These are called 0% balance transfer cards.

Balance transfer credit cards are helpful when used correctly, but they’re not for everyone. To qualify, you’ll typically need good or excellent credit (670+ FICO). Before applying for one, here are a few things to look out for:

  • Fees: Some credit cards come with a balance transfer fee of around 2% or 3% of the amount transferred. Certain ones also have an annual fee. Try to go with one that doesn’t come with any additional fees.
  • Credit limit: The new card should have a credit limit that’s high enough to cover the existing debt. If it doesn’t, you may not be able to transfer enough to make the new card worthwhile.
  • Card issuer: Typically, credit card issuers won’t offer a balance transfer card to existing customers. Shop around for one that does offer it, ideally with 0% promotional APR.
  • Promotional period: Once the low-interest promotional period ends, the remaining balance will start accruing interest. A few will have deferred interest, which is based on the original balance but is delayed until the promotional period ends. At that point, it gets tacked on to the account. Try to pay off the balance in full before this happens to avoid any interest payments.
  • Funds availability: The funds are typically available upon approval, which can be immediate or within a few business days.

Two balance transfer cards to consider are:

3. Mortgage refinance, home equity loan, or HELOC

With a mortgage refinance, home equity loan, or home equity line of credit (HELOC), you can consolidate credit card debt or other high-interest debt.

  • Mortgage refinance: Refinancing a mortgage essentially lets the homeowner get a new mortgage loan to replace the original one. This is often done to reduce the existing interest rate and lower the monthly mortgage payments. But it can also be done to consolidate or pay off other debts. Refinancing is usually best for those who have great credit, stable income, and equity in the home.
  • Home equity loan: This is a type of loan that lets the homeowner borrow money against the equity in their home. The money can then be used for nearly anything, from home renovations to debt consolidation. These loans usually have a fixed interest rate and come with monthly payments.
  • HELOC: A HELOC also uses home equity, but the limit is based on things like debt-to-income ratio and credit score. These often have variable interest rates. They also have a set draw period in which the borrower can use the available money as needed. Once the draw period ends, the borrower must then start making payments until the balance reaches zero.

Defaulting on payments could put you at risk of foreclosure, so keep this in mind. Also, mortgage loan rates are currently high. For example, the national average for a 30-year fixed refinance loan is 5.70% APR. The higher the APR, the higher the cost of the loan.

4. Debt settlement

Debt settlement is a way to get debts reduced to a lower amount than what was originally owed. The process is usually handled by a for-profit debt settlement company.

With debt settlement, the company will contact any creditors and try to negotiate with them. As they do this, the borrower may be asked to stop making payments on the accounts. Instead, they will begin making monthly payments into a secure account. Once they’ve paid the agreed-upon amount, the company will then use that money to pay off the creditors.

The entire process takes two to three years on average. When successful, the borrower can reduce what they owe by up to 50% after agency fees.

Debt settlement does come with some downsides, though, including:

  • No guarantee of success since creditors are not required to reduce the amount owed
  • Expensive fees — usually 15% to 25% of the enrolled debt
  • Damaged credit score due to late or missed payments
  • Late fees and interest can add up over time
  • The amount of forgiven debt may be taxable as income

READ MORE: How to settle your own debts

5. Credit counseling

Another way to get a handle on high-interest credit card debt is with a debt management plan (DMP). This is a type of repayment plan that usually lasts 3 to 5 years and is created and managed by a nonprofit credit counseling agency. By the end of the plan, any enrolled debts should be repaid.

If you decide to work with an agency, a credit counselor will assess your finances and help you determine the best option. If they determine a DMP is the best solution, they will then negotiate with your creditors to help reduce your interest rate, waive late fees, and lower monthly payments.

Upon starting the DMP, you will make one monthly payment to the agency, which will then split the money and pay the creditors. This essentially consolidates the debt and makes it easier to manage payments.

DMPs usually come with a one-time enrollment fee. They also tend to have a $20 to $30 monthly service or account management fee. While enrolled, you typically will not have access to any credit cards, except one for emergencies.

What are the differences between credit counseling and credit repair? Watch this video to learn more.

Benefits of debt consolidation

Before consolidating credit card debt, it’s good to know the benefits of doing so. These include:

  • Simplify monthly payments: Combining multiple accounts into one makes it easier to keep track of payment due dates. This can help prevent late or missed payments, which can cut down on late fees.
  • Save money on interest: If you have a good credit score and qualify for a low-interest option, you could reduce your interest rate. This could save you money in interest charges, as well as reduce your monthly payments. Plus, the less you pay in interest, the more you can put toward the principal balance to pay down the debt.
  • Improve your credit score: Payment activity, credit utilization, and credit mix all play a role in how your credit score is calculated. The more on-time payments and the lower the credit utilization, the more your score could potentially improve. Taking out a new credit card or loan to consolidate debt could also add to your credit mix.

READ MORE: Best debt consolidation loan options

Signs you need to consolidate debt

Here are a few signs that credit card consolidation is the best solution for you:

  • The credit card interest rates are much higher than what you could get with a debt consolidation loan or balance transfer card.
  • You’re only making the minimum monthly payments, or are struggling to make payments at all.
  • Most or all of your credit cards are maxed out.
  • Debt collectors are calling.
  • You find yourself looking into new credit cards to pay off old ones.
  • Your credit score is falling due to missed or late credit card payments and high credit utilization ratio.
  • Other options, such as a debt management plan, seem like the best way to pay off the debt.

READ MORE: How to pay off $10,000 in credit card debt

Pros and cons of debt consolidation

Debt consolidation works for more than credit card debt. You can use it for any kind of consumer debt. Here are some pros and cons.


  • Combine multiple credit card accounts into one simple monthly payment, usually with a lower interest rate
  • Potential for better credit utilization
  • A more manageable monthly payment means fewer late payments, which could help your credit score
  • The lower monthly minimum gives you some breathing room in your monthly budget
  • Could help you repay debts sooner


  • Borrowers with bad credit may end up with higher interest rates or not qualify for a new loan or balance transfer credit card
  • The new account will cause a temporary dip in your credit score
  • There could be prepayment penalties
  • There may be additional fees, such as an origination fee, balance transfer fee, or annual fee
  • Taking out a new loan could be risky if you end up missing payments
  • It won’t fix any underlying financial problems on its own

The bottom line

Credit card consolidation could make it easier to manage monthly payments, lower interest, rates, and get you out of debt sooner. There are several ways to go about this, including a debt consolidation loan, balance transfer card, mortgage refinance, debt management plan, or debt settlement.

Before committing to a strategy, consider your options. Each debt management solution comes with its own pros and cons, so what might work for one person might not work for you.


How can I check my credit report?

Contact each of the three credit bureaus — TransUnion, Equifax, and Experian — and request a copy of your credit report. Or get a free annual copy of all three reports from or sign up for a service that provides free reports, like Credit Karma.

How can I find a credit counselor?

One way to find a credit counselor is through the National Foundation for Credit Counseling. You can either fill out an online form or contact them by phone at 800-388-2227. Alternatively, go to the U.S. Department of Justice website for a list of approved credit counseling agencies in your state.

What are some other options for debt relief?

Start by creating a personal budget that works with your income and expenses. A budget can help you pay off debt, build savings, and plan for the long term. Another option is contacting your creditors directly to see if they can modify your payment plans. If your situation is truly dire, bankruptcy may be another option. Speak with an experienced bankruptcy attorney to see if they recommend this.

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