Consolidating Debt with a CD- or Savings-Secured Loan

What it is

CD and savings loans let you borrow money against a certificate of deposit (CD) or savings account you already own. The funds in your account secure the loan, and since it’s a secured loan, you’ll receive lower interest rates than an unsecured loan.

How it works

Secured loans involve putting up property or equity as collateral. With a CD or savings loan, you put up the funds in your account as collateral, and you can use the loan to consolidate your debt. Depending on the bank, you may only be able to borrow a certain percentage of your account balance.

Factors to consider

  • Interest rates
  • Origination fees
  • CD or savings account balance

notifications-bell-button Important to know

  • Qualifying for a CD or savings loan is simple because your bank won’t be taking a huge risk since your money is already saved with them.


  • Lower, fixed interest rates
  • Quick, easy approval
  • Great for building/rebuilding credit
  • Account continues to earn interest


  • Origination fees may apply
  • Risk losing savings
  • Not best option if you’ve already established credit
  • Cannot cash out until you’ve fully paid off loan


A secured loan uses property—like your car, home, or savings account—as collateral. Unsecured loans, on the other hand, do not require any collateral, which makes them riskier to lenders. Read More

Bottom Line

If you’re looking to build credit history or rebuild your credit, a CD or savings loan can be a great option. You’ll likely get approved quickly and have access to funds almost immediately. However, be sure to consider the terms and fees associated with the debt consolidation loan. If you decide to explore more options, there are plenty of other ways to consolidate debt and build credit.