How to consolidate your credit card debt

Carrying credit card debt is an American tradition. The average household credit card debt is $6,194, with an interest rate of around 14.51%. And, if you have cards with higher interest rates, it makes it more difficult to pay down the balance.

If you feel stuck in this cycle, there are ways out. Here are some options to consolidate your credit card debt and pay off your balances.

Use a balance transfer credit card

If you have a good credit history (your score is above 680), you might qualify for a credit card with a generous introductory period. Some card issuers allow you to pay no interest on balances transferred for the first 12 to 18 months. During this time, you can pay down or off your balances, which saves you money in interest charges over the life of the debt.

Also: The best balance transfer cards

How it works: When you sign up, you notify the card issuer of any balances you want to transfer to them. You’ll need basic information, such as your account number, balance owed, and the mailing address of the credit card company. Upon approval, the card provider issues a check to pay off the credit card balance with your old provider. Then, you’ll make payments at 0% interest for that introductory period. If you do not pay off the balance in that time, you’ll pay interest until you pay off the debt.


  • You’ll gain a 0% introductory rate
  • You’ll save money on interest charges over the life of the debt and could pay it off quicker
  • You consolidate multiple payments into one


  • Some issuers charge a balance transfer fee (3% to 5% of the balance transferred)
  • You have a narrow window of opportunity to pay it off

Pay off debt with equity in your home

A home equity loan allows you to borrow from the equity in your home to pay off debt. It is a wise option because they typically carry lower interest rates than personal loans (these are secured loans, since you’re using the equity in your home as the collateral). The only downside is that if you default on a home equity loan, your bank could take your house.

How it works: A home equity loan allows you to borrow a lump sum. You can use this money to pay off your old credit card debt, and then you’ll pay off the home equity loan in fixed installments, similar to how auto loans work.

Also: 5 ways to improve your credit score without a credit card

There’s also a home equity line of credit (HELOC) you could choose. These are similar to credit cards in that you have a credit line you can borrow. You can use as much of it as needed to pay down credit cards. And as you pay that down, you have more access to your credit limit. If the ultimate goal is paying off debt, the home equity loan is a wiser choice. You borrow what you need and have fixed payments until you pay off the debt.


  • The interest rate can be lower than a personal loan
  • You have fixed monthly payments with a home equity loan
  • A HELOC gives you the flexibility to borrow from your credit line as needed
  • You might qualify for a longer repayment period


  • It’s a more involved process than a personal loan in that you need equity in your home (at least 15%-20%) and an appraisal done
  • If you default on your loan, you could lose your home

Roll your credit card debt into a personal loan

Another option involves consolidating your credit card debt into a personal loan. If you have great credit, you could qualify for a lower interest rate than you’re currently paying on your credit cards.

It allows you to pay your balance down at a faster pace, since you don’t have to contend with a higher interest rate. And it makes it easier for you to pay off debt, as you only have one payment instead of multiple.

Moreover, some online lenders allow you to see if you qualify with a soft pull on your credit score. It means a hard inquiry won’t appear on your credit report.

And credit unions are a wise option to consider because they keep their interest rates low for their members. It’s even smarter if you have an established relationship with one.


  • You could qualify for lower interest rates
  • Some lenders send payments directly to credit card companies on your behalf
  • Your payments are more managed since you only have one
  • A fixed payment allows for easier budgeting


  • Someers assess an origination fee to consolidate — this can equate to 3% to 5% of the debt owed
  • Your credit score could drop if your old credit card provider closes your account

How do I consolidate my credit card debt?

You can consolidate your credit card debt through a personal loan, credit cards with a 0% introductory offer, or a home equity loan. Before you explore any option, review your credit reports. You can receive a free one from each bureau annually at Doing this allows you to see where you stand, make improvements if needed, and contest any items that shouldn’t be on there. Since prospective lenders use this information to gauge risk, knowing where you stand helps you be realistic about your options.

If you’re a homeowner with a lower credit score, a home equity loan might be a wiser option. You might qualify for lower interest rates than you would with a personal loan. And since it’s a secured loan, your bank might feel more comfortable approving you.

Also: The best unsecured credit cards: Bad credit? No worries

Meanwhile, if you have an excellent score, it opens more doors. You can explore credit cards with low introductory rates or personal lenders.

Along with checking your credit, make an inventory of all the debts you want to consolidate. Gather the latest statements from each and receive payoff quotes. It allows you to see how much you need to borrow.

Is consolidating my credit card debt right for me?

If you have been making payments on your credit card balances but haven’t had much success with paying them down, consolidating them could be a wise choice.

Which option is the best fit for me?

Examine how much credit card debt you have and make realistic goals on how long it would take you to pay it off. If you think you could do it within the next 12 to 18 months, a credit card with a 0% introductory rate can help you pay off your balances for less. Conversely, a personal loan works best if it will take several years to pay off the balances.

How do I consolidate my credit card debt with a lower credit score?

If you’re a homeowner with equity in your home, you might be able to do a home equity loan. However, if you’re not and struggle to keep up with payments, a debt management plan might be the next option. Often, you’ll work with a consumer credit counselor, who’ll negotiate on your behalf with your creditors to set up monthly payments. In some cases, they might be able to reduce the interest rate and eliminate late fees. It allows you a repayment plan that fits your budget, and it can get you out of the high-interest, minimum payment cycle.

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