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6 Best Ways to Consolidate Credit Card Debt


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updated: May 26, 2024

Credit card debt can feel overwhelming, especially if your cards have high interest rates or you have multiple cards with balances. If you're having trouble paying off your credit card debt, consider a debt consolidation strategy.

Credit card debt consolidation is when you take your existing credit card debt and refinance it into one new loan with a new lender, ideally with more-favorable terms. There are multiple ways to consolidate your debt, such as balance transfer cards, personal loans, credit card consolidation loans, home equity loans, home equity lines of credit (HELOCs), 401(k) loans, and debt management plans. Consolidating your credit card debt can save you money and simplify your payments. Here are 6 ways to do it.

How to consolidate your credit card debt

1. Balance transfer cards

A balance transfer credit card allows you to move existing balances from other credit cards onto it. If you qualify for a card that offers a 0% introductory balance transfer annual percentage rate (APR), then you can save money on interest. During the introductory period you can make progress on paying off existing credit card debt without having to worry about accruing additional interest. If you can pay off your entire balance before the introductory period ends, then you can avoid paying any additional interest on your existing debt.


Chase Freedom Unlimited®

Chase Freedom Unlimited®

Credit score
Annual fees
Welcome offer

The Chase Freedom Unlimited® is a solid flat-rate earnings card with annual_fee_disclaimer annual fee. Although the 1.5% cash back doesn’t seem impressive at first glance, it becomes more valuable when combined with other rewards cards from Chase that can be redeemed for a far greater value.

This card is recommended for everyday use, whether for doctor copays or big box store purchases. It can be a large earner for cardmembers who want to get the most out of their everyday spending.

Introductory Offer:

  • Earn an extra 1.5% cash back on all purchases (up to $20,000 spent in the first year), which can add up to $300 in cash back!
  • 0% Intro APR for 15 months on purchases and balance transfers, then a variable APR of 20.49% - 29.24%.

Intro Card Rewards:

  • 6.5% cash back on travel booked through Chase Travel℠, our top-tier rewards program where you can redeem for cash back, travel, gift cards, and more.
  • 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery services.
  • 3% cash back on all other purchases (up to $20,000 spent in the first year).

After the First Year or $20,000 Spent Card Rewards:

  • 5% cash back on travel booked through Chase Travel℠.
  • 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery services.
  • Unlimited 1.5% cash back on all other purchases.

Additional Benefits:

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  • Credit Monitoring – Keep track of your credit health with Chase Credit Journey, offering free access to your latest score, alerts, and more.

Member FDIC

  • Balance transfer fee: balance_transfer_fees
  • Cash advance fee: cash_advance_fee
  • Foreign transaction fee: foreign_transaction_fee

However, any balance remaining after your promotional period ends will accrue interest at the card’s regular balance transfer APR. This can be high, so be sure to pay attention to the card’s regular APR when you figure your budget. Of course, when the introductory period ends, you can also then transfer the remaining balance to a new 0% APR card, if you can get one. Call it the rinse-and-repeat strategy. (Note that each time you open a new credit card can mean a temporary drop on your credit score.)

You should always research the card’s terms and conditions. The best balance transfer credit cards have a long introductory financing period and charge a minimal balance transfer fee, such as 3% of the amount transferred. Paying the fee could be worth the cost if you would be saving money overall by paying down your debt during the introductory financing period.

Some balance transfer cards may revoke your introductory financing offer if you make a late payment, so the best practice is to set up autopay or reminders on your calendar to pay your credit card bill on time. Also, you can’t transfer a balance above the card’s credit limit. If the amount you transfer is nearly your entire balance, then it can negatively affect your credit score, because your credit utilization ratio will be high. Some lenders may also charge over-the-limit fees.

2. Unsecured personal loans

Personal loans can be used for a variety of purposes, such as to fund a home renovation or consolidate other existing debts. Personal loans can be secured or unsecured. Unsecured loans are not backed with collateral, such as home equity or a vehicle, and are paid back in regular monthly payments.

RELATED: Best Auto Loan Rates

If you're thinking about using a personal loan to consolidate your credit card debt, you should compare the loan’s interest rate with the rate of your existing debt. Most interest rates on personal loans are relatively high, but your existing credit card APR could be higher still.

The best personal loan rates will be reserved for applicants with excellent credit. Personal loans can come with additional fees and penalties, such as origination fees, late payment fees, prepayment penalty fees, and application fees.

3. Credit card consolidation loans

Credit card consolidation combines multiple debts, such as credit cards or existing personal loans, into one loan with a single monthly payment, ideally with a lower interest rate than the average rates of your previous loans. If you qualify for a lower rate on a credit card consolidation loan, then you can save significant money over time on interest. Plus, it can be simpler to make one monthly payment, rather than having to remember to make multiple payments each month.

Once you're approved for a credit card consolidation loan, the lender will pay you a lump sum, which you will use to pay off your existing debts. You will then make monthly payments toward the debt consolidation loan. Payments are typically fixed over the repayment term, which is generally two to seven years.

However, you have to have a good enough credit score to qualify for a debt-consolidation loan. If you don’t qualify for one large enough to cover your existing debt—or if the loan you do qualify for has a higher interest rate than your existing debt—credit card consolidation won’tt be a good option for you.

4. Home equity loans or lines of credit

Home equity loans and home equity lines of credit (HELOCs) are secured by the value of your home. This makes these loans less risky for the lender, allowing it to offer lower interest rates than for personal loans or other types of unsecured loans. Repayment terms on home equity loans and HELOCs are usually long, with lower monthly payments. Some HELOCs charge interest only during the initial draw period, which is usually 10 years.

With home equity loans and HELOCs, you risk losing your home if you don’t make your payments, as the lender can foreclose on your home if you don’t repay the loan. Also, home equity loans and HELOCs may charge closing costs of up to 5% of the loan amount, and some HELOCs charge annual fees.

5. 401(k) loans

If you have a 401(k) through your employer, it may be possible to take out a 401(k) loan to consolidate your credit card debt. A 401(k) is a qualified retirement investment account composed of money deducted directly from your paycheck before taxes are withdrawn. The maximum amount of money that you can borrow from a 401(k) loan is either (1) the greater of $10,000 or 50% of your vested balance, or (2) $50,000, whichever is less.

The interest rate on 401(k) loans is usually lower than on credit cards and personal loans. Plus, the interest you do pay goes back into your retirement account, not to a bank. 401(k) loans are also easier to get, as there is no credit check involved because the loan is secured by your retirement savings. However, most 401(k) loans have to be repaid within five years. If you leave your job, the loan will be due in full within 60 days.

6. Debt management plans

A debt management plan is an informal agreement with your lenders to pay off your existing debt through one monthly payment to your new credit counselor—you need to work with a credit counselor to get one. With a debt management plan, you will make one monthly payment to the debt management company, which then pays all of your creditors for you.

To qualify for a debt management plan program, you have to be up to date on your payments and owe at least $1,000 in unsecured debt. You don’t need to take out a new line of credit with a debt management plan, but you may have to close your existing lines of credit as part of the debt management program.

If you're approved for a debt management program, a credit counselor will work directly with each of your creditors to negotiate a lower interest rate and possibly waive some fees. The interest rates can be significantly lower, which will help you pay off debt faster.

Once you have a plan, you may wish to use Quicken to automate your budgeting and debt management.




$5.99 or $4.97 or $6.57 a month
Simple interface to track spending and create a budget based on expenses
Links to accounts

To rebuild your credit while managing your debt, you might look at the software program Brigit, which will help you build a positive payment history.

There are some predatory debt management programs out there. Be sure to do your research before sending any sensitive information.

TIME Stamp: Credit card debt consolidation works in many cases

If you have credit card debt, consolidating it into one loan can help simplify your finances and save money on interest. Credit card consolidation can ultimately help you pay off your debt faster and more easily.

Before you choose a strategy, compare your existing and new loan’s interest rates, terms, monthly payment amounts, and fees to determine if credit card consolidation is the right solution for your particular situation. If you do decide to consolidate your credit card debt, then you should make a plan for paying off your debt and managing your finances so that you don’t fall further in debt.

Frequently asked questions (FAQs)

What Is credit card consolidation and how does it work?

Credit card consolidation is when you take your existing credit card debt and refinance it into one new loan with a new lender, ideally with more favorable terms. There are multiple ways to consolidate your credit card debt, and doing so can save you money and simplify your payments.

What are the benefits of credit card consolidation?

Credit card consolidation can save you money on interest if you're able to qualify for a lower interest rate. This could help you get out of debt faster, as more of your money will go toward paying off your debt instead of toward interest payments. It can also help you simplify your finances, as you will have fewer monthly payments to make after consolidating your debt.

If you're able to pay off debt, credit card consolidation can have a positive effect on your credit score in the long run. However, be aware that it can negatively affect your credit score at first because it involves a new credit inquiry and lowers the average age of your accounts.

Debt consolidation vs credit card refinancing: What’s the difference?

Debt consolidation and credit card refinancing are two ways to pay off credit card debt. Debt consolidation is when you refinance multiple loans into one new loan with a new lender. The goal is to consolidate several debts into one debt in order to save money and have only one monthly payment.

Credit card refinancing often involves just one debt, with the goal of getting a lower interest rate on it. This can mean moving it to a different card with a 0% balance transfer. Another approach is to try to negotiate a lower rate with your current credit card company. It doesn’t hurt your credit score to ask and sometimes you can succeed if you reach the right person.

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