At a Glance

If you’re feeling overwhelmed by debt from multiple credit cards, you may find relief in consolidating. You’ll find there are many ways and strategies for paying off credit card debt, so take time to learn how credit card debt consolidation works, the pros and cons of each method, and which option works best for you.

In this article, read more about:

So, how do you consolidate credit card debt? With the goal of creating a new payment that has a lower interest rate than before, you take your credit card balances and combine the credit cards into one payment. This reduces the number of monthly payments you’re responsible for.

There are several strategies to pay off credit card debt, but the best way to consolidate debt depends on how much debt you have, how many credit cards you have, your credit score, and your future financial goals.

For most debt consolidation methods, you must meet certain eligibility requirements and apply for the consolidation method, such as a loan or balance transfer card. Once approved, you can use the new funds to pay off your old debts, then make payments toward the new one.

Compare: Credit Card Debt Consolidation

What debt do you want to consolidate?

Select all that apply

Others does not include mortgage

Should I consolidate my credit card debt?

If you’re having a hard time making payments on or decreasing your credit card debt, consolidating your credit card debt may be right for you. As with any decision regarding credit card debt, it’s important to evaluate some of the pros and cons. Benefits of merging all credit card debts include reducing your interest rate and lowering monthly payments, which can balance some of the downsides such as fees for debt consolidation.

Related: Pros and cons of debt consolidation

Balance Transfer Personal Loan Home Equity Loan 401(k) Loan
  • 0% APR introductory period
  • Negotiable interest rate
  • Shorter repayment tenor
  • Lower interest rate
  • Better chance of qualifying without great credit
  • Lower interest rates
  • No credit check
  • Credit check
  • Potential annual fee
  • Potential higher APR depending on credit
  • Foreclosure possible in the event of defaulting on the loan
  • Decrease in retirement savings
  • Quick repayment required if changing jobs
  • Good to excellent credit
  • Vary by lender: better credit results in better APR
  • Home equity
  • Retirement savings

Best ways to consolidate credit card debt

There are many ways to consolidate credit card debt, including personal loans, balance transfers, and do-it-yourself methods. Examples of these can include:

  • Personal installment loans
  • Transfer credit card balances to a single, 0% interest credit card
  • Specialized debt consolidation loan
  • Reach out to friends and family

Each comes with its pros and cons. To find the best way to consolidate credit card debt for you, consider your financial situation.

If you have good or excellent credit (FICO® Score of 670+) and you can afford a potentially higher monthly payment or you simply have a manageable amount of debt, you might want to consolidate credit debt with a balance transfer credit card, personal loan, or DIY method.

However, if your credit score is low, a personal loan or balance transfer card may not be the best bet as you could end up paying a higher interest rate (or you may not qualify all together). You might consider a home equity loan or 401(k) loan. If you can’t afford a potentially higher monthly payment or your current debt payments, you might try paying down your credit debt with a DIY method or looking into a debt management plan.

Create your free My Credello account today!

Tailored to your needs and financial goals, we can help you manage your debts and track your progress to becoming debt-free.

Consolidate with a balance transfer credit card

This consolidation method moves your credit card balance from one or more credit cards to a single balance transfer card. This option is also called credit card refinancing. Most balance transfer cards offer a 0% APR introductory period, often 12-18 months. Do the math to ensure the interest you save over time will be worth the cost of the fee and make a plan to pay off the credit debt before the end of the interest-free promotional period.


  • 0% APR introductory period, often 12-18 months


  • May charge an initial fee of 3-5% of the amount transferred
  • Some cards charge an annual fee
  • The lender may check your credit with a hard inquiry, which may hurt your credit score


  • Good to excellent credit

Related: Credit Card Refinancing vs. Debt Consolidation

Get a debt consolidation loan

If you’re approved for a debt consolidation loan, you’ll use the new funds to pay off your existing credit card debt balances. Then, you’ll make payments toward your new loan, paying that down over time. There are several different types of consolidation loans you may be eligible for.

Personal loans

Talk to a bank, credit union, or online lender about a personal loan, also called a credit card consolidation loan. If you qualify for a personal loan, you will use the loan to pay off your credit card balances and then repay the loan in one monthly payment. Note that bad credit may land you a higher APR, so make sure the personal loan’s interest rate is lower than your credit cards’ rates.


  • Pre-qualify without affecting your credit score
  • Fixed but negotiable interest rates
  • Repayment term of 3-5 years


  • Some loans carry a one-time fee of 1-8% of the loan amount
  • Potentially higher APR than your current credit cards


  • Eligibility requirements differ by lender
  • Better credit will help you get a lower APR

Home equity loans

If your home is worth a decent amount, you may be able to use some of its value to pay off credit debt. Talk to a mortgage lender about your options for a home equity loan, a home equity line of credit (HELOC), or cash-out refinancing. And be sure you can afford new monthly payments—if you default on the debt, the lender can foreclose on your home.


  • Lower interest rates than personal loans
  • Longer repayment periods
  • You may qualify without good credit


  • Lack of payment may lead to foreclosure


  • You need equity in your home
  • The budget to repay this loan without delay

401(k) loans

It is possible to dip into your employer-sponsored retirement account to consolidate credit card debt. Plan well for these monthly repayments as the punishments are stiff, from heavy penalties and fees to taxes on the amount you withdrew. If you lose or leave your job, a 401(k) loan is due within two months.


  • No credit check, which means no impact on your credit score
  • Lower interest rates than you’d pay at a bank or another lender


  • You are decreasing your retirement savings
  • Lack of payment may result in penalties and fees
  • 60 days to repay if your employment situation changes


  • 401(k) retirement account

Consolidate with a debt management plan

If you feel in over your head with credit card debt, there are other consolidation options. Reach out to a non-profit credit counseling agency to start a debt management plan (DMP). A credit counselor can help cut interest rates (generally by half), consolidate payments, and extend your debt-payoff timeline.

DIY consolidation of credit card debt

If consolidation doesn’t fit your financial situation, you might consider a DIY approach to reducing credit card debt. For these examples, you’ll be batching your repayment according to interest rates or amount. Do not include your mortgage as a debt, but instead focus on your credit card and other debts you may have.

The faster you can pay off your debts, the better for your financial situation and future.

Cash-out refinancing

This process essentially works by having a person refinance their car, truck, or other type of vehicle. The cash earned from this process is then used to consolidate your debt. When trying to do cash-out refinancing, visit as many lenders as possible. The evaluation of a vehicle can be subjective at times, so it is best to get more than one opinion.

Borrow from retirement

While it isn’t commonly known, you are able to borrow from a 401(k) plan by using an aptly named 401(k) loan. There are certain restrictions such as a five year limit to repay the loan (if you don’t want to pay early withdrawal fees), you can’t borrow more than 50% of your vested value, and if you leave your job you need to repay the loan in 60 days.

Additionally, don’t forget that you are taking money from your retirement fund. Should you not be able to repay in full, keep in mind what the consequences may be in the future.

Debt settlement

When debt settlement occurs, creditors agree to forgive a large part of your debt. In general, a debt settlement agreement happens when the borrower offers to pay a decently large lump-sum in return for a certain amount of the debt being forgiven. For those with access to funds, but finding long term repayment difficult, this can be a potentially helpful method.

Build and maintain healthy credit habits

One of the best ways to avoid debt and the need for credit card consolidation is to build healthy credit habits. Factors such as a low credit utilization ratio, monthly credit reviews and payments (as well as automated payments), and shopping for the best low rate credit card can help you stay on top of your debt.

Looking for the next step?

Let’s do it. We can match you with consolidation options based on your goals and debt info.


How to consolidate credit card debt on your own?

The best way to consolidate credit card debt on your own can vary from person to person, but balance transfer, personal loans, and utilizing 0% APR credit cards are all common strategies. Keep in mind that there are fees and other costs that can be associated with consolidating credit card debt, so be aware of the benefits and drawbacks of each strategy.

Read More: How to Consolidate Credit Card Debt on Your Own

How to consolidate credit card debt without hurting your credit?

When looking for the best way to consolidate credit cards without hurting your credit, it’s important to remember that on time and in full payments are some of the fastest ways to increase your credit score. Do not take on additional credit if you are unable to meet the monthly payments. If possible, consolidate your debt into a format with 0% interest rate, such as using certain credit cards, so that the impact from the debt is minimized if you can’t pay.

Related Reading: How to Consolidate Credit Card Debt Without Hurting Your Credit

How to get a loan to consolidate credit card debt?

There are a number of financial institutions that offer options for credit card debt consolidation loans. It’s worth noting that you should ideally find a lender who you have an established history with, so that the interest rate is lower. Third-party lenders may also charge higher interest rates on the loan if you do not have a great credit score.

How to consolidate credit card bills?

Consolidating your credit card bills can be done with balance transfers, personal loans, cash-out financing, or debt settlement in the event it is necessary. The best way to avoid needing to learn the best way to consolidate credit card debt is by practicing good credit habits and avoiding taking on more than you can pay back.

Related Reading: How Bill Consolidation Loans Work

How to consolidate credit card debt with a low credit score?

Even if you have a low credit score, it’s still possible to consolidate credit card debt. However, in most cases, the lower your score the higher the interest rate on the consolidation financing will be. In some cases, you may not be able to get a lower rate on the consolidation option than your current debt. Your best options would be to use a balance transfer credit card, a personal loan, or tap into your home equity.

Related Reading: How to Consolidate Debt with Bad Credit

How to consolidate credit card debt into mortgage?

When you consolidate your credit card debt in a mortgage refinance, you can put the home equity toward paying off the credit card. This option is called a cash-out refinance and it can get you a lower monthly payment and interest rate. However, cashing out the equity in your home means you’re losing that equity, as well as increasing your mortgage debt and extending the loan term.

How to consolidate credit card debt into one card?

To consolidate credit card debt into one card, you can use a balance transfer credit card. These cards typically have a 0% APR introductory period, so you can transfer your outstanding balances to one card and then have a period of time where you can pay off the card without accumulating interest. Just be sure to pay off the debt before the introductory period is up, or face high interest rates on the balance.

How to consolidate student loans and credit card debt?

If you have student loans and credit card debt, one of the best options is to consolidate using a personal loan. If you have excellent credit, you’ll likely get the best interest rate and term with a personal loan.