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Debt Consolidation
How and why to consolidate credit card debt
Updated Sep 13, 2025

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Key takeaways:
Credit card debt consolidation is a way to refinance your debt to reduce the number of monthly bills you pay.
Consolidating credit card debts could help you save money on interest if you get a lower rate or you pay off the debt faster.
Personal loans and home equity loans are common ways to consolidate credit card debt.
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When you know you’d like to change your financial life, taking the reins on your debt is a great way to start. It isn’t just about the numbers, although the numbers are a big factor. Debt consolidation is also about creating peace of mind and finding a clear path forward to the future you want.
Here’s a breakdown of the details you need to know, so you can decide whether credit card debt consolidation might work for you.
What is credit card debt consolidation?
Credit card consolidation is using one new loan to pay off multiple credit card balances.
Multiple credit card balances mean multiple interest rates, multiple payment due dates, and multiple minimum payments. Even if you’ve set all your accounts to autopay, juggling so many bills can be stressful.
If you’re thinking there’s got to be a better way to handle your credit cards, you’re right.
Debt consolidation means one bill to pay, at one interest rate, on one due date.
What’s the best way to consolidate credit card debt?
The best way to consolidate credit card debt depends on how much you can afford to repay and your history with credit accounts. Personal loans and home equity lines of credit (HELOC) are popular solutions to consolidate credit card debt.
Another option is a balance transfer. Transferring your existing credit card debt to a balance transfer credit card with an introductory 0% APR could help you avoid interest charges for a while. Balance transfers carry fees and don’t typically give you a lot of time at 0% (usually 6 to 18 months). It’s easy to fall deeper into a debt hole by juggling balance transfers, so review the pros and cons of using a balance transfer to consolidate debt before going this route.
Benefits of credit card debt consolidation
Credit card debt consolidation can help you feel less overwhelmed by your finances while potentially saving you money. Here are some benefits of debt consolidation.
Fixed interest rate. Credit cards have variable interest rates, which means the rates can (and do) change. If you pay them off with a fixed-rate installment loan, the rate is locked in. The cost of your debt is predictable and stable.
Fixed monthly payment. When you know exactly how much you have to budget toward paying down your debt, you can plan your financial strategy more accurately. Using a loan to pay off your credit cards means your payment amount won’t change.
Peace of mind. Fewer bills to worry about can give you peace of mind and make it easier to manage your finances. Fewer bills could also help you avoid missing a payment, further reducing your stress (and cost).
Improve your credit profile. Using a loan to pay down credit card balances could help you improve your credit standing. That’s because your credit utilization ratio, or how much credit card debt you have compared to the credit limit on each account, affects your credit standing. Loan balances don’t affect your credit the same way as credit card balances.
Save money. Consolidating debts can help you save money in two ways. First, loans tend to have lower interest rates than credit cards, so you could save money if you qualify for a rate that’s lower than the rates you’re currently paying. Second, a shorter repayment period could help you save on interest. Credit card minimum payments are designed to drag out the debt for a long time. The longer you take to repay a debt, the more interest you’ll pay. Many debt consolidation loans are designed to be paid off in just a few years.
Firm payoff date. Credit card minimum payments get smaller as your balance goes down. Also, the debt can drag out indefinitely if you repeatedly charge the account back up and pay it down. Loan repayment is on a firm timeline. Once you enter the repayment period on an installment loan, you can’t borrow more. You’ll know from day one exactly how many payments you’ll make and when the debt will be paid off.
Types of credit card debt consolidation
There are several ways to consolidate credit card debt and reduce the number of debts you carry.
Personal loan
You can use a personal loan to pay off credit card debt. Most personal loans are unsecured, which means you qualify based on your creditworthiness, not on what or how much you own. Personal loan amounts are typically between $5,000 and $50,000, but some lenders offer smaller or larger loans. Funding is as soon as one to three days after your application is approved.
Personal loans usually need to be repaid within five years. They tend to cost less than credit cards, but more than home equity loans.
Home equity loan or home equity line of credit (HELOC)
If you’re a homeowner with sufficient equity, you could borrow against your home equity to consolidate your debt. Equity is the difference between your home’s value and how much you owe on your mortgage. Generally speaking, you could borrow up to 80% of your home’s value if you qualify.
If you opt for a HELOC, you get a few years when you can borrow, repay, and borrow more, up to your limit. This is called the draw period. After the draw period, borrowing ends. Then you enter a repayment period. With a typical home equity loan, you take the full loan amount at one time, and can't borrow more without applying for a new loan.
The repayment period on a home equity loan or HELOC is usually between 10 and 30 years. Home equity loans and HELOCs tend to come at the lowest cost compared to other borrowing options. But if for some reason you fail to repay your loan, you could lose your home.
Balance transfers
A credit card balance transfer is another way to consolidate credit card debt. You move multiple smaller balances to a card that has a high enough credit limit to cover them. Usually, people do this when the balance transfer card is offering a low or 0% introductory interest rate. At the end of the introductory period (typically six to 21 months), you pay the regular interest rate on the amount you haven’t paid off.
Balance transfers could be risky. Many people transfer balances and then charge up the balances on the cards they just paid off. Or when the introductory rate expires, they move the balance to another low-rate balance transfer card, or spread the balance to multiple cards with low interest offers. This can turn into a juggling act that’s hard to maintain. Balance transfers are best thought of as a one-time part of a larger financial strategy.
Related: Pros and cons of debt consolidation
Comparing credit card consolidation methods
Now that you know more about how to consolidate credit card debt, let’s compare several credit card consolidation methods. Here’s a comparison chart to help you understand how each credit card consolidation method works and the pros and cons of each solution:
Personal loan | How they function | Pros | Cons |
Personal loan | Lump sum loan, followed by regular, fixed payments. | Typically no collateral needed Typically lower rates than credit cards Fixed interest rate Short approval and funding process | Lowest interest rates require good credit Approval and funding process could take several days |
HELOC | Borrow, repay, and borrow more during the draw period. Then, fixed payments for the loan term. | Typically lower rates than personal loans Longer repayment period than personal loans Higher loan limits than personal loans | Secured by the home Usually can’t borrow full value of home Some HELOCs have a variable interest rate |
Balance transfer | Transfer balances from your existing credit cards to your new card. | Streamline monthly payments Save on interest during promotional period | 0% APR doesn’t last long Balance transfer fees of 3% to 5% Can be hard to juggle accounts Credit limit might not be high enough to consolidate all your debts |
Tips for consolidating credit card debt
Consolidating credit card debt could help you lower costs, manage your finances, and set a payoff date.
Here are some tips for best success:
Limit your credit card usage. You’re likely to wind up holding multiple paid-off credit cards after consolidation. Take care in how you use them, since charging the accounts back up could put you in a worse financial situation.
Consider closing credit card accounts once paid off. It's up to you to decide whether to keep one open for emergencies. If you're paying down debt, you may want to use a debit card for a while. Your credit score may be negatively impacted if you shut down all your credit cards, but credit scores are fluid and the effect is temporary. Your credit standing could improve naturally if you pay your bills on time and keep your credit card debt low.
Be the boss of your loan. Keep your eye on the prize while you pay down your loan. The goal is to get rid of your debt so you can work toward other financial goals that are important to you. Pay the loan on time to protect your credit health and avoid paying late fees.
What’s next
List your debts and their interest rates. If you can’t get a lower interest rate on the new loan, it might not make good financial sense.
Check with lenders that allow you to prequalify with a soft credit check. That means it won’t hurt your credit to find out what loan you might qualify for.
If you’re not sure which option might be best, get expert advice from a loan consultant who can help you weigh the pros and cons of each path.
Author Information

Written by
Anna is a contributing writer for Achieve. She has specialized in writing personal finance content for over a decade, including writing for Fortune 500 finance clients as well as writing personal finance content for magazines and outlets including Forbes, Refinery29, Nasdaq, Yahoo Finance and others.

Reviewed by
James is a financial editor for Achieve. He has been an editor for The Ascent (The Motley Fool) and was the arts editor at The Valley Advocate newspaper in Western Massachusetts for many years. He holds an MFA from the University of Massachusetts Amherst and an MA from Hollins University. His book Krakatoa Picnic came out in 2017.
Frequently asked questions
Is there credit card forgiveness?
Yes, but it’s usually only partial forgiveness. If you intended to repay your debts but genuinely can’t, your credit card issuers might be willing to reduce the amount you owe and forgive the rest. This is called debt relief. You can negotiate with creditors yourself or let a professional debt relief company work out an agreement for you.
If you can’t afford to repay any of your debt, you may need to talk to a bankruptcy attorney to find out if you qualify for Chapter 7 bankruptcy, which is the kind that lets you walk away from certain debts.
Does credit card debt consolidation hurt your credit score?
Credit card debt consolidation could both hurt and help your credit score. Any time you apply for a new loan, you’re likely to see your credit score drop by a few points. That’s normal, and it’s not permanent.
But high credit card balances hurt your credit score a lot, and paying them off with an installment loan could cause your score to rise.
If I consolidate my credit cards, can I still use them?
You can still use your credit cards if you’ve consolidated your credit card debt, but it might not be a good idea. If you’re trying to get rid of debt, adding more is likely to slow down your progress.
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