Credit Card Debt Consolidation Loans in 2024

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

Tell us about your needs & we’ll find your best match

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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.

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 adebt management plan, which has you make monthly payments to the agency, who pays creditors on your behalf.

Learn more: How to Consolidate Credit Card Debt

When should you consolidate your credit card debt?

While there are several benefits to consolidating credit card debt, it’s not the best option for all borrowers and there are some circumstances when you should choose an alternative. Credit card debt consolidation is best for borrowers who have:

Multiple high-interest debts that need to be repaid or consolidated and would take at least six months to pay off. Those with a smaller amount of debt may be able to pay it off without consolidating.
A great credit score to qualify for a lower interest rate, you should have a strong credit score. Borrowers with scores of at least 720 or higher are most likely to get the best interest rates. While those with poor credit may still qualify, their rates may be higher.
A steady income that will cover the payments if you don’t have enough income to make the new monthly payments, it can significantly affect your credit score and defeat the purpose of consolidating.
A plan to avoid debt in the future if you continue to rack up new debt after consolidating and paying off your old debt, this can continue a cycle of debt that can be challenging to break. Make sure you create a plan for avoiding debt in the future.

How credit card consolidation loans impact your credit?

Consolidating debt with a credit card consolidation loan can affect your credit score in a few ways. First, when you apply for a loan, it triggers a hard credit inquiry which will drop your score by a few points. This decrease typically only lasts a few months. The other way a loan can negatively affect your score is if you don’t make your monthly payments on time or you miss them completely. This can significantly decrease your score and make getting out of debt much more difficult.

On the other hand, making your monthly payments on time every month can help increase your score. Additionally, because you’re decreasing your credit utilization by consolidating, you may see a bump in your score.

Pros and cons of credit card debt consolidation

Whether you consolidate your credit card debt with a loan or balance transfer, there are advantages and disadvantages to doing so.

Simplify debt repayment
Lower interest rate (especially with 0% APR balance transfer)
Fixed monthly payments (with loan)
Pay off debt faster
Can improve credit

Could face fees (especially for balance transfer)
Need good credit or might not get lower interest rate
Potential balance transfer limits
Does not solve spending issue

Is consolidating my credit cards a good idea?

The average APR for new credit cards is 22.21% ,and if you carry a balance on your card, the accrued interest and additional debt can add up fast. That’s why consolidating your credit cards may be a good idea. However, it only makes sense if:

You have a large balance or it would take you more than six months to repay the cards.
Your credit score allows you to qualify for a loan with a lower interest rate than your current debt.
You have a steady income that will cover your new monthly payments.
You create a budget and plan to stay out of debt and avoid it in the future.

Otherwise, an alternative to consolidation may make more sense for your situation.

Alternatives to consolidating your credit card debt

If debt consolidation just doesn’t seem right for you, you can consider some alternative methods to quickly pay down your balances. Two popular do-it-yourself debt payoffstrategies include:

Debt Snowball

Pay off smallest to largest balance.

Debt Avalanche

Pay off largest to smallest interest rate.

How debt snowball works

With the debt snowball method, pay off your card with the lowest balance first, while continuing to pay the minimum for your other cards. Then, when you pay off that lowest balance in full, move on to making extra payments toward the next lowest balance—like a snowball.

How debt avalanche works

With the debt avalanche method, focus on your card that has the highest interest rate first, while continuing to pay the minimum for your other cards. Then, once that’s paid off, move on to the next highest interest rate—like an avalanche.

Can I get a credit card consolidation loan with bad credit?

While borrowers with great credit will likely get a better interest rate and loan terms, there are still options for those with poor or no credit. In fact, some online lenders tailor loans specifically for those with poor credit and take into consideration other factors like education and employment. However, you’ll still likely be offered a higher interest rate, so you’ll want to ensure the rate is lower than your current debt or consolidation may not be worth it.

How do I qualify for credit card consolidation?

Like other types of loans, a credit card consolidation loan requires that you have decent credit and a good repayment history. Otherwise, you either won’t get approved for the loan, or you’ll get approved but will be facing a high interest rate that hardly makes consolidating worth it.

Here’s what you might need to qualify for a consolidation loan:

1

Solid credit history

2

Proof of income

3

Collateral like a car or home

How to compare best credit card consolidation loans?

Once you’ve decided a debt consolidation loan is the best option for you, it’s time to start comparing loan companies. Prior to applying for a loan it’s important to compare lenders to find the best one for your situation. A few things to consider include:

Get prequalified when possible . Prequalification can be done online and doesn’t affect your credit score, and it can help you get a more accurate estimate of loan rates and terms you’d qualify for.
Check approved purposes for loans. In most cases, personal loan uses are very flexible and funds can be used for just about anything. However, there are some lenders that prohibit specific uses. Make sure the lender allows credit card consolidation.
Compare loan minimums and maximums. You’ll want to ensure the personal loan amounts available cover all of your credit card balances. Lenders may offer loans between $ and $, but ensure not to borrow more than necessary.
Understand fees. Most lenders have different types of fees such as application fees, origination fees, late payment fees, prepayment penalties, or others. Understand the total cost of the loan prior to applying.
Read customer service ratings and reviews. Having a great customer service team who can help answer your questions or provide support if you need it is essential. Read through their support options and reviews from past or present customers.
Compare interest rates. Know what interest rates you qualify for with your credit score and other financial factors and ensure the rate is lower than your current debt.

How do I apply for credit card consolidation loans?

While the process can differ by lender, generally, these are the steps to apply for a credit card consolidation loan:

Check your credit score. Before starting to shop for a loan or lender, check your credit score and credit report. If there are any mistakes on your report, work to get them corrected. Your credit score is a major factor in determining whether you qualify for a loan or not and what interest rate you qualify for, so checking it first gives you time to improve it if necessary.
Get prequalified. Because this doesn’t impact your credit score, you should take advantage of lenders who allow you to do this to get better insight into the interest rates and terms you qualify for.
Compare lenders. Once you know your score and are prequalified, it’s time to compare lenders and loan options. Be sure to compare interest rates, fees, loan minimums and maximums, terms, customer service reviews, and other factors to choose the best option for you.
Prepare to apply. There are several documents and types of information you’ll be asked to supply for the application such as proof of identity, employment, income, bank account information, and more. Prepping this ahead of time can make the application process faster and easier.
Apply. Most lenders have an online application that can be completed in just a few minutes, and you may find out the same day or next day if you’re approved. However, other loan approvals can take several business days.
Accept the loan and consolidate. Once approved, you’ll accept the loan, sign the final loan papers, and get the funds. Then, use those funds to pay off your credit card debt immediately and start making payments to the new loan.

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.