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How To Consolidate Credit Card Debt

You can trust the integrity of our balanced, independent financial advice. We may, however, receive compensation from the issuers of some products mentioned in this article. Opinions are the author's alone, and this content has not been provided by, reviewed, approved or endorsed by any advertiser.

If you consolidate credit card debt, it’ll be easier and cheaper to pay off your credit card debt. But with so many options to consider, it’s important that you take your time to decide which one is best.

Consumer debt is at an all-time high, according to the New York Federal Reserve, making it more important than ever before to know how to pay off debt effectively and quickly.

Of all forms of consumer debt, credit card debt is among the most toxic, charging double-digit interest rates, often upwards of 20 percent. If you feel like you’re drowning in credit card debt, consolidation can help eliminate it.

What is debt consolidation loan?

In general, debt consolidation loan means taking out a new loan to pay off one or more other debts. The new loan typically has a lower interest rate than what you’re currently paying, allowing you to pay off your debt with less interest.

Debt consolidation can also make your debt repayment plan simpler by replacing multiple monthly payments with one new payment.

Here are some options to consider.

5 ways to consolidate your credit card debt

There’s no single best way to consolidate credit card debt, so it’s important to know what options are available and which one works best for you.

1. Balance transfer credit card

Balance transfer credit cards often offer an introductory 0% APR on new transfers. Among the best credit cards on the market, you can get 15 months or more to pay off your balance interest-free.

The main drawback to balance transfer cards is that many of them charge a balance transfer fee, which is typically three percent or five percent of the transfer amount. Depending on how much you want to transfer, you could be on the hook for hundreds of dollars to process it.

A few balance transfer credit cards that are worth considering include:

BankAmericard(R) credit card

BankAmericard® credit card

Credit Needed: Excellent/Good
  • NEW OFFER: 0% Introductory APR for 18 billing cycles for purchases and for any balance transfers made in the first 60 days, then, 15.24% - 25.24% Variable APR. 3% fee (min $10) applies to balance transfers
  • No annual fee
  • No penalty APR. Paying late won't automatically raise your interest rate (APR). Other account pricing and terms apply.
Intro APR
Intro Term
Intro APR
Balance Transfers
Intro Term
Balance Transfers
Regular APRAnnual Fee
0% Introductory APR on purchases18 billing cycles0% Intro APR for 18 billing cycles for balance transfers made in the first 60 days18 billing cycles15.24% - 25.24% Variable APR on purchases and balance transfers$0

With the BankAmericard(R) credit card, you’ll get a 0% Intro APR for 18 billing cycles for balance transfers made in the first 60 days.

The balance transfer fee is three percent of the transfer amount with a $10 minimum.

Discover it(R) Balance Transfer

Discover it® Balance Transfer

Credit Needed: Excellent, Good
  • INTRO OFFER: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
  • Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate. Plus, earn unlimited 1% cash back on all other purchases - automatically.
  • Redeem cash back any amount, any time. Rewards never expire.
Intro APR
Intro Term
Intro APR
Balance Transfers
Intro Term
Balance Transfers
Regular APRAnnual Fee
0%6 months0%18 months14.24% - 25.24% Variable$0

The Discover it(R) Balance Transfer offers a 0% introductory APR on purchases for six months and balance transfers for 18 months.

The balance transfer fee is three percent. You’ll also get stellar rewards on everyday spending categories that rotate every quarter when you activate. Plus, Discover will double all the cash back you receive in the first year.

Chase Freedom(R)

Chase Freedom®

Credit Needed: Excellent/Good
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 17.24-25.99%. Balance transfer fee is 3% of the amount transferred, $5 minimum
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
Intro APR
Intro Term
Intro APR
Balance Transfers
Intro Term
Balance Transfers
Regular APRAnnual Fee
0%15 months0%15 months17.24 - 25.99% Variable$0

With Chase Freedom(R), you’ll get a 0% APR promotion on purchases and balance transfers for 15 months, then an APR of 17.24 - 25.99% Variable .

The balance transfer fee is the greater of five percent of the transfer amount or $5. The card offers a decent sign-up bonus plus bonus rewards on everyday spending categories that rotate every quarter.

2. Personal loan

You’ll have a set repayment plan

A personal loan can be a great way to pay off credit card debt because it has a set repayment period.

This means that if you have a three-year repayment term, you know you’ll be free from credit card debt in three years. With a credit card, on the other hand, there’s nothing holding you to your repayment schedule.

Personal loans offer lower interest rates than credit cards

Personal loans also offer lower interest rates than credit cards, on average, making it easy to save money while you pay off your debt. The main drawback is that you typically need good or excellent credit to qualify for a great interest rate on a personal loan.

Also, your new monthly payment on a personal loan could be much higher than what you’re already paying, which could be difficult for your budget.

Use Even Financial

If you’re considering a personal loan, check out Even Financial. Even is a loan matching service that takes some basic information from you and checks with multiple lenders to find the best rates and terms for you.

3. Home equity loan

If you own a home and have significant equity in it, it could be worth borrowing against that equity to pay down credit card debt.

Home equity loans typically charge low, fixed interest rates. But the catch is that your home acts as collateral on the home. So if you default on your loan, you could lose your house.

Also, some lenders charge a lot of closing costs and require a lot of paperwork to set up a home equity loan. So while it may be worth going through your current mortgage lender, it may be worth shopping around to see if you can get more favorable terms somewhere else.

4. 401(k) loan

Borrowing from your retirement may not be your top choice. But it could be worth considering if you have poor credit and can’t get any other type of credit card consolidation product.

If that’s not the case, though, a 401(k) loan should typically be considered a last resort. That’s because the money you borrow is no longer invested, contributing to the overall cost of the loan.

Also, if you lose your job or quit, your employer can force you to pay off the remainder of the loan within a short period. If you can’t, you’ll default, and it could affect your 401(k) account and your credit.

5. Credit counseling

You’ll have just one monthly payment

If your credit card debt situation is dire and you’re seriously considering bankruptcy, think about working with a credit counselor before you go that route.

With a credit counseling agency, you’ll typically agree to close down the accounts you want to pay off and enter an agreement with the agency and your credit card company.

Instead of making multiple payments to your card issuers, you’ll make one monthly payment to the credit counseling agency, which will divvy it up amongst your creditors.

You can save on interest

The biggest benefit of working with a credit counselor is that these agencies typically have agreed-upon rates with the credit card companies that are lower—sometimes much lower—than what you’re currently paying. So it could be easy to save on interest.

When you should consider debt consolidation

When you’re overwhelmed with debt

Debt consolidation is best when you’re feeling overwhelmed with credit card debt, and you want to make a plan to get rid of it. Even if you think your overall debt burden is low, it could still be worth looking to debt consolidation to solve your problem.

If you have a good credit, but a lot of debt

That said, your credit usually needs to be in at least good shape to get favorable terms on most debt consolidation products. So if your credit is in the bad or fair ranges, you may want to find other ways to pay off your credit card debt quickly.

If you have a clear plan

You should also avoid debt consolidation if you don’t have a clear plan to pay off your credit card debt and avoid a relapse. Debt consolidation can help you get rid of the symptom — the debt — but it won’t help you solve the core problems for why you’re in debt in the first place.


Credit card consolidation can make it easier and cheaper to pay off your credit card debt. But with so many options to consider, it’s important that you take your time to decide which one is best.

Start with balance transfer credit cards, but also consider personal loans or credit counseling if your credit doesn’t qualify for a balance transfer.

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About Ben Luthi

Ben Luthi is a personal finance and travel writer who covers credit cards, debt, credit, investing, and more. He's currently studying to become a CFP(R) and trying to keep up with his two young kids. You can connect with Ben on Twitter or his website.


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