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Ways to Consolidate Credit Card Debt

Credit card debt consolidation is a strategy that takes multiple credit card balances and combines them into one monthly payment.

Debt consolidation is ideal if the new debt has a lower annual percentage rate than your credit cards. This can lower your interest costs, make your payments easier or shorten your payment period.

The best way to consolidate will depend on the debt you have, your credit score, and other factors.

Here are the five most effective ways to pay off credit card debt:

Refinance with a balance transfer credit card.

Consolidation with a personal loan.

Click Home Equity.

Consider saving a 401(k).

Start a debt management plan.

Balance transfer card


0% introductory April period.


Good to excellent credit is required to qualify.

You usually have a balance transfer fee.

The high APR starts after the introductory period.

Also called a credit card refinance, this option turns your credit card debt into a balance transfer credit card that charges no interest for a promotional period, often 12 to 18 months. You'll need good to excellent credit (690 or higher on the FICO scale) to qualify for most balance transfer cards.

A good balance transfer card won't charge an annual fee, but many issuers charge a one-time balance transfer fee of 3% to 5% of the amount transferred. Before choosing a card, calculate whether the interest it pays over time will eliminate the cost of fees.

Aim to pay off your balance in full before the 0% introductory annual percentage period ends. Any remaining balance after that time will carry the credit card's regular interest rate.

» Compare: Best Balance Transfer Credit Cards

Credit Card Consolidation Loan


A fixed interest rate means your monthly payment will not change.

Low APR for good to excellent credit.

Direct payment to creditors provided by some lenders.


It's hard to get a low rate with bad credit.

Some loans carry an origination fee.

Credit unions require membership to apply.

You can use an unsecured personal loan from a credit union, bank, or online lender to consolidate credit card or other types of debt. Ideally, the loan will give you a lower annual interest rate on your debt.

Credit unions are nonprofit lenders that can offer their members more flexible loan terms and lower rates than online lenders, especially for borrowers with fair or bad credit (689 or less on the FICO scale). The maximum annual percentage rate (APR) charged at federal credit unions is 18%.

Bank loans provide competitive annual interest rates for borrowers with good credit, and benefits for existing bank customers can include larger loan amounts and rate discounts.

Most online lenders allow you to qualify for a credit card consolidation loan without affecting your credit score, although this feature is less common among banks and credit unions. The pre-qualification gives you an overview of the price, loan amount and term you can get after you formally apply.

Look for lenders that offer special debt consolidation features. Some lenders, for example, will send loan money directly to your creditors to simplify the process.

Not sure if a personal loan is the right choice? Use our debt consolidation calculator to enter all your debts in one place, see typical rates from lenders, and calculate your savings.

Home equity loan or line of credit


Lower interest rates than personal loans.

It may not require good credit to qualify.

A long repayment term keeps payments lower.


You need equity in your home to qualify and a home appraisal is usually required.

Your home is protected, which you could lose if you default.

If you're a homeowner, you may be able to take out a loan or line of credit against the equity in your home and use it to pay off your credit cards or other debts.

A home equity loan is a lump sum loan with a fixed interest rate, while a line of credit works like a variable rate credit card.

A HELOC often requires interest only during the withdrawal period, which is usually the first 10 years. This means you will need to pay more than the minimum payment to reduce your principal and affect your total debt during that period.

Because your home loan is secured, you'll likely get a lower rate than you would on a personal loan or transfer credit card