If you’re feeling overwhelmed by debt from multiple credit cards, you may find relief in consolidating. Learn how credit card debt consolidation works, the pros and cons of each method, and see which option works best for you.

When consolidating credit debt:

  • Understand the pros and cons
  • Look at your credit score
  • Consider a balance transfer card
  • Compare consolidation loans
  • Look into a debt management plan
  • Reduce debt on your own

How does credit card debt consolidation work? When you consolidate credit card debt, you’re combining the balance of multiple credit cards into a single monthly payment. Consolidation works if the long-term goal is to pay off your credit card debt.

Pros of consolidating credit card debt

The benefits include reducing your interest rates and lowering your monthly payments, allowing you to pay off debt faster. Consolidation also simplifies doing bills—instead of paying multiple credit card bills, you’ll have just one statement a month. You might even improve your credit score.

Related: How to pay off debt

Cons of consolidating credit card debt

The downsides of consolidating your debt depend on the method and your financial situation. Be sure to figure out how each consolidation method affects your interest rates over time.

Choosing the best way to consolidate

There are many ways to consolidate your credit card debt, including personal loans, balance transfers, and do-it-yourself methods, but each comes with its pros and cons. To find the best solution, 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.

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

Get a consolidation loan

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.

Do-it-yourself methods

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.

Debt avalanche

Pay off your credit card with the highest interest rate first. If you do this as quickly as possible, you can save money in the long run.

Debt snowball

Pay your smallest debts first, with the goal of paying them off as soon as possible, while paying the minimum on all your other debts. This approach can be extremely motivating, though you may pay more in the long run due to interest on more substantial debts.