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How to Consolidate Credit Card Debt

5 min read

Published January 23, 2025

Table of contents

Key Takeaways

A balance transfer can help you consolidate credit card debt.
Debt consolidation requires you to pay your entire debt, including interest and fees.
You might want to wait to consolidate debt if you’re applying for a mortgage or home loan, because applying for a new credit card could impact your credit score.

The average credit card debt in the United States is $6,545. If you’re struggling with similar debt, you might have a few questions. Is it smart to consolidate credit card debt? Does debt consolidation hurt your credit score? Are there any risks associated with consolidating debt? What are the best methods to consolidate credit card debt?

You can consolidate credit card debt by moving balances from one or multiple credit cards to a single account. One of the most common ways to do this is with a credit card with a balance transfer offer, but you can also use certain loans to consolidate credit card debt.

Why should you consolidate credit card debt?

Better debt management: When you combine all your credit card debt to one account, you create fewer accounts and due dates to manage. This can make it easier to track your debt and organize your personal finances. With a good debt management plan that includes fewer accounts, you can reduce the chance to accidentally miss a payment and hurt your credit score.

Lower interest: If you transfer your existing debt to a card with a lower interest rate, you might save money and pay off the debt sooner. Or you may be able to get a lower monthly payment, which can free up funds for other parts of your budget.

How a credit card with a balance transfer offer can consolidate debt

Rather than using an existing card, you might consider credit card refinancing with a new card that comes with a promotional balance transfer offer. The intro rate and promotional period can vary depending on the card.

For example, one credit card company might offer you a low introductory APR for 15 months. Another credit card issuer may offer a lower intro rate for a shorter time.

You also might receive balance transfer offers on your current credit cards. Note that you might not be able to transfer balances between credit cards or loans from the same lender.

Did you know?

A balance transfer credit card is one of the most common debt consolidation tools. This is because these cards may offer an introductory low APR on transferred balances.

View Low Intro APR Offers

You may have to pay a 3% to 5% balance transfer fee on each transfer. Compare the fee to the potential interest savings to determine if a balance transfer offer makes sense.

It’s a good idea to pay off the credit card balance before the end of the promotional period. If you don’t, any remaining balance will start to accrue interest at the card’s standard APR.

Also, check if there’s a promotional rate on purchases. If there isn’t, making purchases will cause you to accrue interest on both your purchases and your transferred balances.

Taking out a loan for credit card debt consolidation

Another option is to take out a debt consolidation loan and use the proceeds to pay off your credit card balances. People often turn to an unsecured loan for consolidating credit card debt. You could also look into a home equity loan or line of credit, but be careful about taking on additional debt that puts your home at risk. Discover has a debt consolidation calculator so you can see how a loan consolidation program may help lower your monthly payment.

A single loan may offer a lower interest rate than credit cards, and they often have a fixed rate and repayment term. Some people like the certainty a steady loan term can bring because it’s easy to budget the monthly payment and know when you’ll pay off the debt. However, a personal loan won't have a 0% APR offer, and your lender might charge an origination fee.

If you’re considering a personal loan for debt relief, try to get several loan offers and compare the rates, fees, and repayment terms to see which will be best.

Discover offers balance transfer credit cards that may be more suited to your needs than a loan. If you qualify, you may receive a Discover credit card offer with a low intro APR on balance transfers and purchases.

Find the Best Credit Card for You

When should you avoid consolidating debt?

Consolidating credit card debt generally doesn’t make sense if you don’t qualify for a low interest balance transfer or loan offer. Even if you can, there are a few circumstances when you might want to avoid consolidating credit card balances.

If you have credit card debt because of overspending, you may want to consider your financial habits and mindset first. Otherwise, you could wind up deeper in debt if you move your balances and then continue overspending on your credit limit. Meeting with credit counselors might help you get to the root of your debt issues.

A debt consolidation program won’t get rid of your debt or monthly payments. If you can’t afford your bills because of a medical emergency or lost job, you may want to reach out to your creditors to ask about hardship options.

You should know that applying for and opening new credit cards and loans might hurt your credit score because a hard inquiry is placed on your credit report. Your score can recover as you make on-time payments and pay down the debt. However, if you’re applying for a mortgage or auto loan, you might want to wait and consolidate the debt after you close on the new loan.

Credit card consolidation may help you better manage your debt and payments. It may even save you money when you transfer your credit card debt to a card with a low intro APR offer. A personal loan or home equity loan could be alternatives if you don’t qualify for a low APR balance transfer credit card. Consolidation loans for debt relief may have their own drawbacks. You’ll want to weigh the pros and cons of any debt consolidation program, including any fees and the interest rates.

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