A step-by-step guide to consolidating debt successfully | finder.com
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Achieve your debt consolidation goal

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Kickstart your financial goal and start repaying your debt in 3 weeks with 5 easy steps.

If you’re having trouble keeping up with multiple credit card and loan payments, a balance transfer card can help you with a low interest rate and a single monthly payment — but the rates can jump up when the promotional period ends.

Step 1: Collect the information you’ll need.

1_documents-needed

Week 1. Start by collecting the information and documents you need to calculate your expenses. It may seem a little tedious at first, just know this exercise is going to be a crucial step to understanding (and maybe re-evaluating) where your money is going.

Start by collecting these:

  • Outstanding bills and expenses. Phone, utility, memberships etc.
  • Your bank statements. You can download these online at most banks or visit a branch if you don’t have an online account.
  • Any other important financial records. This includes bills, final notices and receipts

Next, let’s exercise our bookkeeping skills:

  1. Write down your expenses for the past month. You can draw this out on paper or start a new spreadsheet to stay organized.
  2. Add everything up. This’ll give you a ballpark figure for how much you should be budgeting for expenses each month. To be as accurate as possible, calculate your expenses for the last three months and find the average.
  3. Calculate your income. If your expenses exceed your income, you need to re-evaluate. Consider the expendable costs you’re currently engaged in and think about the costs/luxuries you can do without.

Extra tips

  • Go through your inbox and online bank statements to make sure you’re on top of your finances and everything you owe.
  • When calculating how much you owe, remember to consider automatic debits from your account (such as monthly bills or charity donations) that could impact your debt levels. If you decide to consolidate your debts, you’ll need to organize for these direct debits to be taken from your new account.
  • If you’re having trouble calculating how much you spend on fluctuating expenses like grocery and entertainment, keep all of your receipts for a month. If you bank online, you can also keep track of all of your debit card payments.

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Step 2: Check your credit score

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Week 1. Once you know how much you owe and how much to budget, you can start considering which debt consolidation solution offers you the most value. Before you make a decision, you’ll need to consider which options you’re eligible for.

Most debt consolidation alternatives require cardholders to have a good credit history. If you don’t already have a copy of your credit file, it’s easy to order one for free.

If you receive your credit file and find that your score isn’t up to scratch, you might want to improve your credit score before you apply for a new credit card. Keep in mind that rejected credit card applications can have a negative impact on your credit score, so rushing the process and applying for a card you won’t be approved for could backfire.

Improve your credit score

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Step 3: Compare, compare, compare

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Week 2. When comparing balance transfer credit cards, there are a few key questions you should ask yourself to determine which card is right for you:

  • When does the promotional offer end? If your card comes with a 0% offer, it’s likely that it will only last for 6 to 24 months. Calculate whether you could repay your entire balance by the end of this period. If not, consider a card with a longer promotional period or a debt consolidation loan.
  • How much can I transfer? Most cards only accept balance transfers up to a fixed amount (or a percentage of your total debt) If your balance exceeds this amount, then you’ll be unable to transfer the entire amount.
  • Who can I transfer from? Most providers won’t let cardholders transfer balances from an existing account with the same bank. You might also find that you’re unable to transfer debts from partnered, affiliated or co-owned banks. Confirm which banks you can transfer between.
  • Other fees and features. Details such as the annual fee, interest rates on purchases and rewards programs could also impact how you use the card during and after the balance transfer is in place.
  • Eligibility requirements. Make sure you earn the minimum income requirement, have a good credit history and meet any other conditions before applying.

Compare balance transfer credit cards

Name Product Filter values Introductory Balance Transfer APR APR (Annual Percentage Rate) for Purchases Annual Fee Minimum Credit Score
0% for the first 15 months (then 16.99% to 25.74% variable)
16.99% to 25.74% variable
$0
670
0% intro APR for 15 months from account opening on purchases and balance transfers.
0% for the first 15 months (then 16.99% to 25.74% variable)
16.99% to 25.74% variable
$0
670
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
$0
680
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
$95
680
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
$0
680
Earn up to $250 back. Earn $150 back after you spend $1,000 or more in purchases with your new card within the first 3 months of card membership. Plus, earn an additional $100 back after you spend an additional $6,500 in purchases within your first 12 months. Rates & Fees
0% for the first 15 billing cycles (then 14.24% variable)
14.24% variable
$0
670
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
$0
670
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
$0
670
A 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 16.99% variable)
16.99% variable
$195
740
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
0% for the first 15 billing cycles (then 16.99% variable)
16.99% variable
$495
670
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 16.99% variable)
16.99% variable
$995
740
Earn 2x points when redeemed for airfare through the Luxury rewards program.
1.99% for the first 6 monthly billing cycles (then 16.24% to 22.24% variable)
16.24% to 22.24% variable
$0
670
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
$39
300
Borrow up to $10,000 and get your credit score back on track.
0% for the first 12 statement closing dates (then 15.24% to 25.24% variable)
15.24% to 25.24% variable
$0
720
Earn more cash back for the things you buy most.
NASA Federal Platinum Advantage Rewards Credit Card
NASA Federal Platinum Advantage Rewards Credit Card
7.9% for the first 90 days (then 11.9% to 17.99% variable)
11.9% to 17.99% variable
$0
670
Enjoy perks and save money while gaining points with every purchase.
10.99% for the first 6 months (then 24.99% variable)
24.99% variable
$0
580
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.

N/A

20.99% variable
$25
300
Establish credit history - with responsible use you may be upgraded to an unsecured credit card.

N/A

21.99% variable
$39
300
Helps establish, strengthen and even rebuild your credit.

N/A

21.24% variable
$29
300
Get worldwide purchasing power and flexibility as you work to build or re-establish your credit history.

N/A

26.99% variable
$0
300
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
$0
580
Enjoy a 0% introductory APR on purchases and balance transfers for the first 6 months.

Compare up to 4 providers

Learn more about balance transfer credit cards

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Step 4: Apply wisely4_apply-wisely

Week 2. Once you’ve compared your credit card options and decided on one, it’s time to apply for your card. Click on the green “Apply now” button on the table to be directed to a secure online application with your preferred bank.

Most online applications will take approximately 10 to 15 minutes to complete and submit. To make sure the application process goes smoothly, ensure that you meet the eligibility requirements and have all of the required documentation on hand before beginning the application. If you apply online, many providers can you give a response within 60 seconds or so based on the information you have provided. If you’re approved, you’ll receive confirmation and information packages regarding the card and your account. If there has been a problem or the provider needs to cross-check some information you’ve provided, your application status may be left pending. If you haven’t received any feedback for a few days, contact the provider directly to discuss the status of your application.

Pro-tip for balance transfers

If the card has a promotional balance transfer offer, it’s best to apply for the balance transfer while you’re filling out the rest of the application so you can request that your debt is transferred to your new account as soon as possible. By doing so, this will allow you take advantage of the full length of the promotional offer.

Have the details of your transfer, including how much you need to transfer and where from, ready before beginning the application. If you’ve decided to close your old account, you’ll also need to contact your old bank to organize this.

If you haven’t met the eligibility requirements or failed to provide the necessary documents, you’ll receive a notification that your application has been rejected. If your application has been denied, don’t apply for another straight away. Take the time to understand why your application was rejected, compare your options and wait a few weeks before applying again.

Remember that multiple rejected applications will have a negative impact on your credit score, so you’ll want to avoid applying for more than one card in a short time frame.

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Step 5: Start consolidating5_start-consolidating

be-freeWeek 3. If your application has been approved, you can expect to receive your card within one to two weeks. If you applied for the balance transfer at the time of application, your balance should’ve transferred to your new account.

If you haven’t already, spend the time in between approval and receiving your card mapping out a realistic budget and set of goals that’ll help you keep your monthly payments on track.

Use these 3 simple rules to keep yourself moving forward:

  1. Set monthly goals.
  2. Use calendar notifications to remind you when payments are due.
  3. Set a final date for when you’d like to have your debt repaid preferably before the promotional period finishes.

Bottom line

If you’re having trouble staying on top of multiple credit card and loan payments, consolidating your debt can help you regain control of your finances. Just make sure that your new interest rate is low enough to make it worth your while.

Frequently asked questions

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