4 ways to consolidate your debt

Young woman looking at her longstanding debt and considering the best way to consolidate it.

How to consolidate debt and start saving

Getting a handle on your finances often involves consolidating debt so that your payments are more manageable. You can then work on paying your balance down.

If you want to consolidate debt and start saving, look into different debt consolidation options on the market and consider reducing your monthly spending to an amount within your means.

What is debt consolidation?

Debt consolidation usually means combining all or some of your existing debts into a single payment. This may involve consolidating your debts into a new loan or taking out a balance transfer credit card to move debts onto one card.

With debt consolidation, your goal may be to simplify the number of bills you receive each month while also reducing the amount of interest you pay each month on your debts.

Check out four options for managing your debt with Discover®

	Credit score requirements	Maximum amount	Annual percentage rate (APR)
Balance transfer credit card	Good credit scores may receive low APR introductory offers	Your credit limit determines the amount you can transfer from other credit cards	View current APRs and credit card offers from Discover
Personal loan	Good credit may earn lower interest rates and higher loan limits	Between $2,500 and $40,000 depending on your credit profile	View current APR ranges from Discover Personal Loans
Home equity loan	Good credit may earn lower interest rates	Starting at $35,000 up to a 90% combined loan-to-value (CLTV) for qualified homeowners	View current home equity loan rates from Discover Home Loans
Cash out refinance	Good credit may earn lower interest rates	Starting at $35,000 up to a 90% combined loan-to-value (CLTV) for qualified homeowners	View current mortgage refinance rates from Discover Home Loans

Balance transfers to credit cards

It may be possible to move debt from one credit card to another via a balance transfer. You may even have an existing card or find a new card that offers a zero or low annual percentage rate (APR) for a certain length of time, which is known as a promotional term.

You will likely be charged interest on your transferred balance at the card’s standard APR rate if you still owe that amount after the promotional term ends. It may help to be aware of your card’s promotional terms and manage your balance accordingly.

Personal loans

You may be able to use a personal loan to pay off various debts. Then, instead of dealing with multiple creditors, you'll make a single payment toward the loan every month.

Most personal loans are unsecured loans, which means they don’t require any collateral like a house or a vehicle.

The interest rates on unsecured personal loans are typically higher than the interest rates on secured loans.

Home equity loans

Your home equity may help you reach your financial goals.

Home equity loans may be suitable for larger debts, long-term expenses, and other big expenses like home improvements, weddings, or emergencies. They are secured loans that use your home as collateral.

There are several reasons why you may want to consider a home equity loan for debt consolidation:

Secured loans like home equity loans may have lower interest rates than unsecured loans.
Home equity loans typically have fixed interest rates, meaning monthly payment amounts stay consistent throughout the repayment term. Discover Home Loans offers a home equity loan with low, fixed rates.
These loans may have higher borrowing limits.
Typically higher borrowing limits than other loan types.

Discover Home Loans offers low fixed rates on home equity loans and mortgage refinances with terms of 10, 15, 20, or 30 years and $0 application fees, $0 origination fees, $0 appraisal fees, and $0 costs due at closing. For example, if you borrowed $60,000 for a 20 year term at 8.86% APR, your fixed monthly payments would be $534.45.

Cash out refinances

Unlike a home equity loan, a cash out refinance lets you refinance your existing mortgage for an amount larger than what you owe. The difference between your refinanced loan and what you owe is paid back to you in cash, which you can use to pay off debts.

Whereas a home equity loan is a loan in addition to your mortgage that you will have to manage and repay separately, a cash out refinance allows you the simplicity of a single bill each month.

See how much you may be able to save by consolidating debts into a home equity loan with this debt consolidation calculator from Discover.

Main: The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover Bank or its affiliates.

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Discover Home Loans Restrictions and Details

We do not lend in IA or MD. You are not guaranteed approval. Once you apply and submit your credit and property information, we will confirm your eligibility. We don’t lend on cooperatives, condotels, investment properties, log homes, manufactured homes, mobile homes, or secondary homes. We will only originate one 1st lien mortgage per property per 12-month period. The maximum loan amount you qualify for will depend on additional factors, including type of loan, lien position, loan-to-value and your credit history. We may change rates, program terms, and conditions without notice. Discover Card accounts may not be paid off with this home loan. All loan programs are offered by Discover Bank, 2500 Lake Cook Road, Riverwoods, IL 60015. NMLS ID 684042.