Credit Card Debt Consolidation

If your long-term goal is eliminating credit card debt, consolidating is a great option. With consolidation you can:
  • Combine the balances of multiple credit cards
  • Simplify your monthly payments
  • Lower your interest rate

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What is credit card debt consolidation?

Americans have about $887 billion in credit card debt, a 13% increase from 2021, which is the largest year-over-year increase in more than 20 years. Rising interest rates, inflation, and other economic factors are leading to record-setting credit card debts in American households.

If you have multiple credit cards with debt, you may want to consider consolidating them. Whether through a credit card debt consolidation loan, balance transfer credit card, or other method, credit card debt consolidation lets you combine multiple high-interest credit card debts into a single payment with a fixed rate and term. Ideally, the new consolidation method has a lower interest rate than your outstanding debt, which can help you save money and pay off your debt faster.

How credit card consolidation works on Credello

Enter your credit card debt details.

We’ll need the balance, APR, and typical monthly payment (including interest) for each of your credit cards.

Let us know your overall goal.

Do you want to lower your monthly payments, reduce your total interest, or pay more monthly to get out of debt faster?

Tell us your credit score and monthly income.

We’ll use this info to help match you to the best way to consolidate your credit card debt.

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Compare your credit card debt consolidation options.

See how well a balance transfer credit card, personal loan, and more match your debt consolidation needs.

Why consolidate your credit card debt?

Overall, the national average credit card debt among cardholders with unpaid balances was $6,569, though some consumers have much more. And, with more than 54% of all active credit card accounts having a balance, many Americans are facing the real struggles of debt.

There are a number of reasons why consolidating your credit card debt can be beneficial:
  • Lower interest rates: Your debt will cost you less in the long run. A lower interest means you’ll pay less in interest over time, which keeps dollars in your wallet.
  • Simplified payments: Combining multiple debts into one means you only have one monthly payment to keep track of instead of several.
  • Easier planning and budgeting: Fixed interest rate and monthly payments makes it easier to calculate how much you owe each month, making budgeting easier. You can also more easily calculate when the debt will be repaid.
  • Improved credit score: Replacing revolving credit card debt with an installment loan or one debt can lower your credit utilization, therefore improving your credit score.
  • Pay off debt faster: With fixed and lower payments and the ability to budget better, you may be able to pay off your debt faster after consolidation.

Credit card debt consolidation terms you should know

Credit card balance - how much you owe on a credit card, including interest
Interest rate/APR - the cost of borrowing money, usually stated as an annual percentage rate (APR) for credit cards
Minimum monthly payment - the lowest amount you can pay toward your credit card balance to stay in good standing
Credit score - a number between 300 and 850 that represents how credit worthy you are
Balance transfer - a consolidation method where you move debt from one credit card to another, usually with a lower interest rate
Personal loan - a consolidation method where a lender pays off some or all of your debt, and you repay in fixed monthly installments with interest
Credit utilization ratio - the amount of credit you use, usually expressed as a percentage of your total available credit across all your cards

How should I consolidate my credit card debt?

When it comes to credit card debt consolidation, you have a variety of options. Here are some of the most effective ways to consolidate:

  • Get a balance transfer credit card

  • If you try to repay your debt quickly, you can take advantage of 0% intro APR offers, which can save you money on interest. Most balance transfer credit cards will charge balance transfer fees, though.

  • Consolidate with a personal loan

  • Debt consolidation loans from banks, credit unions, and online lenders come with fixed interest rates and set repayment terms, so paying off your debt can be predictable.


  • Use your home equity

  • Homeowners can get a home equity loan, home equity line of credit (HELOC), or cash-out refinance to help pay off credit card debt. Since your home counts as collateral, interest rates are typically lower than personal loans, but you’ll have to pay closing costs.

  • Look into a debt management plan

  • Nonprofit credit counseling agencies can assess your debt and help build a debt management plan, which has you make monthly payments to the agency, who pays creditors on your behalf. 

FAQs

Should I consolidate my credit cards into one payment?

If you have a large amount of credit card debt and qualify for a consolidation loan with a lower interest rate, you should consider debt consolidation. This makes managing your debt easier (with just one payment), can save you money, and help you pay off your debt faster. However, consolidation isn’t right for everyone, so be sure to compare all of your options.

How long does it take to get a credit card consolidation loan?

Some lenders approve and finance a loan within one or two days, while others take a few business days. Once you apply for the loan, you must be approved and then accept the loan terms. Then, the funds will be transferred to your bank account and you can use them to consolidate your credit cards.

What credit score do you need for a consolidation loan?

To get the best rate and terms, lenders prefer borrowers to have a score of at least 720 or above. However, some lenders will work with borrowers with scores of 680 or above. There are also lenders who will help borrowers with even lower scores, but remember the lower your score, the higher the interest rate on the consolidation loan.

How do I get out of credit card debt fast?

Consolidating your credit card debt can be one way to get out of credit card debt fast. Another way can be to use the debt snowball or debt avalanche method. The important thing is to avoid using your credit cards as much as possible while paying off the debt to avoid racking up more debt.

Should I get a new credit card to consolidate my debt?

Balance transfer credit cards with a 0% APR introductory offer can be a great way to consolidate debt. Because you don’t have to pay interest for a certain period, you can pay down the debt without accruing more interest. Just make sure you pay off the balance before the intro period is over; otherwise, you’ll start accruing high-interest charges on the balance.

How much could I save with a credit card debt consolidation loan?

This depends on how much debt you have, your credit card debt interest rates, and your consolidation loan’s interest rate. However, if you have a lower rate on your loan, you will end up paying less in interest and saving that money in the long run.

Will checking my rate hurt my credit score?

Getting prequalified, which allows you to get an estimate of interest rates you’d qualify for with a lender, does not hurt your credit score.

How quickly can I get a credit card consolidation loan?

This can vary by lender, but for some lenders the process can be completed as soon as the next business day while with other lenders it can take a few business days. It depends on how qualified you are, whether your application was complete, and other factors. Check with the lender to learn more.

What does it cost to consolidate debt?

While it doesn’t technically cost anything to consolidate debt, you will owe interest on the loan. Your interest rate depends on factors like your credit score and history, income, debt-to-income ratio, and other factors.

What is the difference between credit card consolidation and credit card debt refinancing?

Credit card refinancing is just a fancy way of saying balance transfer. Balance transfers are most effective when you can get approved for a new credit card with a 0% APR intro offer, which usually means you don’t have to pay interest on your balance for 12-18 months. To consolidate with a balance transfer, you open a new card and move your other credit card balances onto that card. The catch is that you should pay off that balance before the promo period ends, or else you’ll face a super high interest rate on whatever’s left of your balance.

Debt consolidation is when you combine multiple debts into one monthly payment. When you consolidate your credit card debt with a loan, you put the lump sum from the loan toward your credit card balances and then typically streamline your multiple monthly payments into just the loan repayment.