How to consolidate debt |

Which debt consolidation options are right for you?

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Save money on high-interest debt and get out of debt faster.

Too many payments keeping you down each month? Consolidating your debt could make your life a lot easier by putting it all in one place. Use this guide to learn when consolidation can free up your budget, what types of debt you can consolidate and other options for getting out of debt.

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Anna Serio

Anna Serio
About the author

Anna Serio is a staff writer untangling everything you need to know about personal loans, including student, car and business loans. She spent five years living in Beirut, where she was a news editor for The Daily Star and hung out with a lot of cats. She loves to eat, travel and save money.

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Monevo Personal Loans - DUPLICATE FOR CPC FEB 2019 ONLY

Our top pick: Monevo

Quickly compare multiple online lenders with competitive rates depending on your credit score.

  • Minimum Loan Amount: $1,000
  • Maximum Loan Amount: $100,000
  • Loan Terms: 6 months to 7 years
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    Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
    Name Product Product Description Min. Credit Score Max. Loan Amount APR
    Credible Personal Loans
    Get personalized rates in minutes and then choose a loan offer from several top online lenders.
    Good to excellent credit
    5.34% to 35.99% (fixed)
    Monevo Personal Loans
    Quickly compare multiple online lenders with competitive rates depending on your credit.
    3.99% to 35.99% (fixed)
    LendingClub Personal Loan
    A peer-to-peer lender offering fair rates based on your credit score.
    6.95% to 35.89% (fixed)
    SoFi Personal Loan Fixed Rate (with Autopay)
    No fees. Multiple member perks such as community events and career coaching.
    5.99% to 16.49% (fixed)
    Best Egg Personal Loans
    A prime lender with multiple repayment methods.
    640 FICO®
    5.99% to 29.99% (fixed)
    Even Financial Personal Loans
    Get connected to competitive loan offers instantly from top online consumer lenders.
    3.84% to 35.99% (fixed)
    Payoff Personal Loans
    Pay down your debt with a fixed APR and predictable monthly payments.
    5.99% to 24.99% (fixed)

    Compare up to 4 providers

    What is debt consolidation?

    Debt consolidation combines all of your debt into one, manageable monthly payment — often with lower interest. Debts could include credit cards, medical bills and car payments. The best way to consolidate debt depends on the amount of debt you have, your income and credit score.

    7 ways to consolidate your debt

    Option Best for … How it works
    Debt consolidation loan Paying off large amounts of debt over several years at a low interest rate Borrow up to $100,000 to pay off your account balances. Afterwards, you only need to pay one monthly repayment on the new loan.
    Balance transfer credit card People with a smaller amount of debt who want to pay it off fast and save on interest Move all of your debt to one credit card, usually with an introductory APR of 0% for 9, 12, 15, 18 or 21 months.
    Debt relief Those who’ve exhausted all other options A company negotiates with your creditors to lower your APR and monthly repayments (debt management) or allow you to pay it off in a lump sum less than your original balance (debt settlement).
    Secured loan Home or car owners Get a lower interest rate by borrowing against an asset, such as the equity you’ve built in your home, the value of your car or a certificate of deposit.
    Home equity line of credit (HELOC) Homeowners Take out a low-interest rate line of credit by using your home equity as collateral.
    Student loan consolidation People with student loan debt Consolidate student loans by using a lender that specializes in them.
    401(k) loan People who’ve saved up retirement funds in a 401(k) account Borrow from your retirement fund balance at a low interest rate. You stand to owe it all back in one lump sum if you leave your current employer.

    How do balance transfers work to consolidate debt?

    Balance transfer credit cards come with a 0% intro APR period and a small balance transfer fee. The intro APR period is usually around 12 months — with some as short as six months and others as long as 21 months. If you have high-interest credit card debt that you can afford to pay off in a year, a balance transfer is a great option. You’ll typically need good or excellent credit to qualify.

    Our pick for balance transfers: Blue Cash Everyday® Card from American Express

    • $150 statement credit after you spend $1,000 in purchases on your new card within the first 3 months.
    • 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%).
    • 2% cash back at U.S. gas stations and at select U.S. department stores, 1% back on other purchases.
    • Low intro APR: 0% for 15 months on purchases and balance transfers, then a variable rate, currently 15.24% to 26.24%.
    • Over 1.5 million more places in the U.S. started accepting American Express® Cards in 2017.
    • Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits, gift cards, and merchandise.
    • No annual fee.
    • Terms apply.
    Read less
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    See Rates & Fees

    Compare balance transfer credit cards

    Name Product Introductory Balance Transfer APR Standard APR for Balance Transfer Annual Fee
    0% for the first 15 months (then 17.24% to 25.99% variable)
    17.24% to 25.99% variable
    0% intro APR for 15 months from account opening on purchases and balance transfers.
    0% for the first 15 months (then 17.24% to 25.99% variable)
    17.24% to 25.99% variable
    0% intro APR for 15 months from account opening on purchases and balance transfers.
    0% for the first 15 months (then 15.24% to 26.24% variable)
    15.24% to 26.24% variable
    Earn a $150 bonus statement credit after you spend $1,000 on purchases in the first 3 months. Rates & Fees
    0% for the first 12 months (then 15.24% to 26.24% variable)
    15.24% to 26.24% variable
    Earn $200 bonus cash back after you spend $1,000 on purchases in the first 3 months. Rates & Fees
    0% for the first 15 months (then 15.24% to 26.24% variable)
    15.24% to 26.24% variable
    Earn a $150 statement credit after you spend $1,000 or more in purchases with your new card within the first 3 months of card membership. Rates & Fees
    0% for the first 15 billing cycles (then 14.24% variable)
    14.24% variable
    A low, variable APR on purchases, balance transfers and cash advances.
    0% for the first 15 months (then 15.24%, 19.24% or 25.24% variable)
    15.24%, 19.24% or 25.24% variable
    Earn unlimited 1.5% cash rewards on purchases. See Rates and Fees.
    0% for the first 18 months (then 13.24%, 17.24% or 21.24% variable)
    13.24%, 17.24% or 21.24% variable
    An 18 months 0% intro APR period on both purchases and balance transfers, plus zero foreign transaction fees, makes this is a strong well-rounded card. See Rates and Fees
    0% for the first 15 billing cycles (then 17.24% variable)
    17.24% variable
    Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
    0% for the first 15 billing cycles (then 17.24% variable)
    17.24% variable
    Receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
    0% for the first 15 billing cycles (then 17.24% variable)
    17.24% variable
    Earn 1x points when redeemed for airfare through the Luxury rewards program.
    0% for the first 12 months (then 15.15% to 25.15% variable)
    15.15% to 25.15% variable
    Earn $150 in statement credit after you spend $1,200 on purchases within the first 90 days from account opening.
    0% for the first 12 months (then 15.99% to 25.99% variable)
    15.99% to 25.99% variable
    20,000 bonus LifeMiles after first card use
    0% for the first 12 months (then 15.99% to 25.99% variable)
    15.99% to 25.99% variable
    40,000 bonus LifeMiles after first card use
    0% for the first 12 months (then 12.99% to 17.99% variable)
    12.99% to 17.99% variable
    Earn 25,000 bonus points when you spend $2,500 in the first 90 days from account opening.
    0% for the first 12 months (then 11.99% to 17.99% variable)
    11.99% to 17.99% variable
    2% cash back for all PenFed Honors Advantage members and 1.5% cash back on all purchases made with your card.
    0% for the first 12 months (then 9.24% to 17.99% variable)
    9.24% to 17.99% variable
    Low APR on all purchases including cash advances.
    0% for the first 12 months (then 11.99% to 17.99% variable)
    11.99% to 17.99% variable
    Earn 5x points on gas at the pump and 3x points on groceries. Earn 1x points on all other purchases.
    1.99% for the first 6 monthly billing cycles (then 16.24% to 22.24% variable)
    16.24% to 22.24% variable
    1% cash back to the nonprofits, K-12 schools, colleges and religious organizations of your choice.
    9.95% for the first 6 months (then 17.99% fixed)
    17.99% fixed
    Borrow up to $10,000 and get your credit score back on track.


    9.15% to 26.15% variable
    This card offers the same low rate for purchases, cash advances and balance transfers.
    0% for the first 12 statement closing dates (then 15.49% to 25.49% variable)
    15.49% to 25.49% variable
    Earn more cash back for the things you buy most.
    7.9% for the first 90 days (then 12.15% to 17.99% variable)
    12.15% to 17.99% variable
    Enjoy perks and save money while gaining points with every purchase.
    10.99% for the first 6 months (then 25.24% variable)
    25.24% variable
    2% cashback at restaurants or gas stations on up to $1,000 in combined purchases each quarter. Plus 1% cash back on all other credit card purchases.


    21.24% variable
    Establish credit history - with responsible use you may be upgraded to an unsecured credit card.


    22.49% variable
    Helps establish, strengthen and even rebuild your credit.


    21.24% variable
    Get worldwide purchasing power and flexibility as you work to build or re-establish your credit history.


    26.99% variable
    Take control and build your credit with responsible use.
    Aspire Platinum Mastercard®
    Aspire Platinum Mastercard®
    0% for the first 6 billing cycles (then 8.9% to 18% variable)
    8.9% to 18% variable
    Enjoy a 0% introductory APR on purchases and balance transfers for the first 6 months.

    Compare up to 4 providers

    Compare balance transfer cards

    What's the difference between consolidation loans and balance transfers?

    Debt consolidation loans are usually through a bank or financial institution, and usually can cover larger debts. Repayment term range between three and seven years.

    On the other hand, you can transfer multiple debts onto a credit card that can offer 0% APR between six and 18 months. You have as long as you need to pay off this debt, however, the APRs after the introductory period are often high.

    Differences between debt consolidation loans and balance transfers

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    Should I consolidate my debt?

    Debt consolidation loans and balance transfer credit cards are not for everyone. When done under the wrong circumstances, it could hurt your finances more than it helps.

    Consider consolidating your debt if …

    • Your debt is less than half your income. This is a manageable amount that you can pay off with debt consolidation.
    • You have good credit. Good enough to qualify for a low-interest loan or balance transfer credit card with a 0% interest introductory period.
    • You can afford payments. You have enough reliable cash flow to cover the cost of a new loan.
    • You have a plan to curb spending. Debt consolidation can’t fix the underlying problem of spending more than you have if that’s the source of your debt.

    Look at other options if …

    • Your debt is more than half your income. If you’re in too deep, another loan or credit card could make things worse. You might want to try a debt settlement company instead.
    • You’re facing financial hardship. Losing your job, an expensive divorce and other personal tragedies can send you into a debt spiral. In these situations, a consolidation loan often can’t help much.
    • You have poor credit. You’ll likely have trouble qualifying for a debt consolidation loan or balance transfer credit card with rates low enough to make it a smart financial move.
    Strategies for beating debt based on how much you owe

    What kinds of debt can I consolidate?

    Understanding what types of debt you can consolidate is the first step toward deciding what consolidation options you might want to consider — if at all. People generally consolidate these kinds of debts:

    • Credit card debt. Having multiple credit cards requires that you keep track of making timely payments on each, which can be cumbersome. Many credit cards also charge noticeably high APRs.
    • Personal loans. If you have multiple personal loans, you can think about bringing them under a single umbrella. Depending on your existing financial situation and creditworthiness, you may qualify for a more competitive interest rate on a debt consolidation loan.
    • Student loans. You can consolidate federal student loans through the government or take out a personal loan to consolidate private student loans, federal or both. If you have student debt, you also might want to look into refinancing, which often comes with a consolidation option.
    • Business loan debt. Some business lenders offer business debt consolidation loans as well to help you improve your cash flow by simplifying multiple payments into one.
    • Medical bills. Just one quick trip to the hospital can land you with a mountain of medical bills that’s difficult to keep track of — let alone afford. Taking out a loan to pay them off can make your payments more reasonable in the short term.
    • Retail credit cards. The discounts and rewards are great, but get too many and it can be difficult to keep track of what you owe and which payments to prioritize.
    • Lines of credit. Reduce the amount you owe on multiple lines of credit by paying them off with a fixed-term loan.
    • Tax debt. Owe back taxes? Consider taking out a debt consolidation loan to pay them off instead of an IRS installment agreement. Loans tend to have more flexible terms than installment agreements and if you have good credit, interest could be a lot more affordable.

    Compare debt consolidation options now

    How debt consolidation could affect my credit score

    In the short term, consolidating your debt could lower your credit score. When you take out a new loan or credit card, creditors do a hard pull on your credit that temporarily lowers your score. However, if it helps you pay off your debt faster and make on-time payments, your score could be better off in the long run.

    How debt consolidation affects my credit score

    4 things to avoid when consolidating debt

    • Carefree spending.
      Identify the problem that got you into debt in the first place. If it was simply a lack of control, you may want to take advantage of a secured credit card that will only allow you to spend what you’ve deposited on the card. By doing this, you’ll learn how to responsibly manage money within your means, and you’ll improve your credit score with timely payments.
    • Forgetting origination costs of a personal loan.
      When you take out a $10,000 loan, you probably think it is going to cover your $10,000 worth of debt, right? Wrong. What you forget to consider is the origination fee — typically between 3% and 5% — that comes with your loan. When you’re applying for a loan to consolidate your debt, keep this in mind so you can fully consolidate your debt.
    • Consolidating the wrong debts.
      Don’t bother consolidating debts that have low interest rates or low balances just for the sake of having one convenient monthly payment. It might seem appealing to have a 0% interest rate during the promotional period, but if you can’t pay off the full balance of what you’ve consolidated, you’ll revert to the normal interest rate – which can be unfavorable.
    • Costly debt settlement programs.
      With so many financial tools available to consolidate debt, debt settlement programs should be a last resort. It may seem like they’re helping, but they could destroy your credit. Sure, they will eventually get to settling your credit, but that is only when the creditors are desperate enough to settle for a large sum. Don’t be tricked by the lower payments they offer you in exchange for an uphill battle with your credit score.

    Common misconceptions about debt consolidation

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    Debt advice from your favorite personal finance experts

    Dave Ramsey

    You get out of debt by changing your habits. Commit to getting on a written game plan and sticking to it.

    Suze Orman

    If you are truly serious about getting rid of the credit card debt you will find ways to scale back on your spending.

    Farnoosh Torabi

    If you choose to work through a debt settlement firm, do your homework. Yes, they will negotiate on your behalf, but you may end up paying hefty fees for the service.

    What happens after I consolidate my debt?

    You could find yourself in two scenarios after getting your debt consolidation loan:

    • You’re entrusted with paying off your debt. Your lender has just deposited your loan into your account and now it’s up to you to pay off your debt. You can either pay it off all at once or continue to make payments if there are steep prepayment fees. This is generally only an option for people with perfect credit, however.
    • You only have to worry about paying your new loan. Your lender has asked for your debt payment information so that they can handle the payments themselves. This situation is far more common. It’s easier for you, it’s available to a wider range of credit scores and you won’t be tempted to spend some of your loan on, say, a vacation.

    What can I do if I’m denied?

    Getting denied for a debt consolidation loan or balance transfer credit card can happen for a variety of reasons. The first and most important thing to do is figure out why you were declined by contacting your lender — many will tell you without prompting. Poor credit score? Take steps to improve it. High debt-to-income ratio? Try making a budget to help you pay off some of your debts faster.

    Before you reapply, consider getting a cosigner or look for a secured loan to make you a more viable candidate. If neither of those are possibilities, or you’re still rejected, you might want to consider debt settlement or even bankruptcy.

    When to turn to debt relief

    When your debt becomes unmanageable and a balance transfer credit card or consolidation loan just won’t cut it, you may want to consider turning to debt relief. Debt relief comes in several forms such debt settlement, bankruptcy, debt management, negotiation or credit counseling. Generally, debt relief is for those whose debt is over 50% of their annual income or have only a nominal chance of paying off their unsecured debts within a reasonable time frame.

    Compare debt relief options

    Bottom line

    You don’t have to be in debt forever. There are ways to become debt free — and help to get you there. Sometimes a simple balance transfer credit card will do the trick, or perhaps you need to find help with a debt consolidation company.

    If you’ve considered filing for bankruptcy, try working with a debt relief company first. You could get help lowering your debt by negotiating with your debtors.

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    Frequently asked questions about debt consolidation

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    9 Responses

    1. Default Gravatar
      RedDen21October 3, 2017

      Hello. I am looking for a debt consolidation loan/credit card that I can use to get a better rate and consolidate my $8,000+ debt with. But I have a slightly above 600 score with 4-7 aplications in the last year. I have been declined for just about every loan/cc I have applied for.

      • Default Gravatar
        DanielleOctober 4, 2017

        Hi there!

        Thank you for contacting finder. We are a comparison website and general information service, we’re more than happy to offer general advice.

        I’m sorry to hear about your declined loan applications. Typically, your credit score would just be an indication whether you’d be able to get the loan that you want, but, in general, lenders would consider your application by taking into account your overall financial situation like your income, assets and even liabilities. So it’s really best to review the eligibility criteria and check with the lender your chances of approval before you send out your final application.

        Nevertheless, the above page actually has helpful guides on how you’re able to consolidate your debt. By going through the table above, you may contact a lender and check your eligibility/approval direct with them. You may also refer to this page for your other options if you’re looking at consolidating debts with a credit card.

        I hope this helps.


    2. Default Gravatar
      RobertSeptember 24, 2017

      Typically what kind of loan works best to pay off attorney fees?

      • finder Customer Care
        MariaSeptember 24, 2017Staff

        Hey Robert,

        Thank you for your comment. You can check out our page on personal loan uses to find out what you can and cannot use a loan for with certain lenders.

        As finder is a financial comparison website providing general information, we are not permitted to provide our users with personalized financial advice.

        I hope this helps.


    3. finder Customer Care
      AshSeptember 7, 2017Staff

      Hello Judy,

      Thank you for reaching out to us.

      This pages about the pre-approval and payday may help you in determining the legitimacy of a loan offer.

      I hope this information helps.

      Let us know if there is anything else that we may assist you with.


    4. Default Gravatar
      LorrieAugust 14, 2017

      I’m low income my husband is a vet. We need 25, 000.00 to pay off all that we owe.

      • Default Gravatar
        DanielleAugust 14, 2017

        Hi Lorrie,

        Thank you for contacting finder. We are a comparison website and general information service, we’re more than happy to offer general advice.

        You are on the right page. You may customize, review, and compare the offers available on the table. Once you have selected one, you may proceed by clicking the green “Go to Site” button.

        I hope this helps.


    5. Default Gravatar
      LuisJuly 27, 2017

      Where are areas I can get loans in Puerto Rico? Or Who lends to U.S Citizens who reisde out there?

      • finder Customer Care
        HaroldJuly 27, 2017Staff

        Hi Luis,

        Thank you for your inquiry.

        While we don’t have the currnet listings for the lenders in Puerto Rico. You may want to check and search the loan options through the city nearest to your location.

        I hope this information has helped.


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