4 Ways to Consolidate Credit Card Debt

A look at credit card debt consolidation methods—and some potential benefits and drawbacks of those options


Managing debt can be stressful at any time. This is particularly true when you fall behind on bills, especially if you’re watching interest charges build up every month. If you find yourself struggling, consolidating your credit card debt could be one way to simplify and lower your payments.

But there’s plenty to think about as you decide whether consolidation is right for you. Keep reading to learn a few things to consider and a few methods to consolidate credit card debt, including potential risks and benefits.

Key Takeaways

  • Credit card debt consolidation might allow you to combine multiple debts into a single payment with a lower interest rate.
  • Common methods to consolidate credit card debt include balance transfers, personal loans, debt management plans and home equity loans or home equity lines of credit.
  • Be sure to carefully consider the details of any consolidation loan. 
  • While credit consolidation may be a helpful debt management option for some, it isn’t right for everyone.

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What Is Credit Card Debt Consolidation?

In basic terms, credit card debt consolidation allows you to combine several credit card balances. If you’re currently making payments on multiple credit cards each month, you may be able to combine them into one monthly payment by using a loan or a balance transfer

There are a couple of notable benefits to consolidating debt. 

First, you may be able to lower your payments. How? By consolidating with a loan or a credit card that has a lower interest rate than your current accounts. Some credit cards even offer 0% introductory rates to start, but that rate may only last for a limited amount of time.

Credit card debt consolidation could also simplify the payment process. By grouping your balances together, it might be easier to make one payment each month and track your progress as you pay down your debt.

If you can snag a 0% introductory APR as part of a balance transfer, credit card consolidation could help you tackle your credit card debt and simplify your payments. Here are some more details on balance transfers and other common methods to consolidate credit card debt.

1. Balance Transfers

A balance transfer can be used to consolidate multiple balances into one credit card account. Part or all of your debt from other cards is moved to the balance transfer card. And you then make monthly payments to the new card going forward.

If you’re interested in this option, it also might be worth considering:

  • How long introductory interest rates apply to transferred balances—and whether the rate will apply to new charges you make.
  • How your rate could change over time—and what it could cost you—if you don’t pay off your debt. If the rate after the introductory period is higher than what you're paying now, you’ll need to think carefully about whether it's a good idea to transfer. 
  • Whether any transfer fees will be added to your transferred balance.
  • How a balance transfer could affect your credit.

2. Personal Loans

Situations vary, but typically, personal loans are unsecured. If a personal loan is unsecured, it means you don’t have to provide collateral to be approved for the loan. But there may be other factors that determine whether you’re qualified.

If you’re approved for a personal loan, you could pay off or pay down your credit card debt with the funds. The money you previously used for monthly credit card payments would then go to pay off the personal loan.

But keep in mind that not all personal loans are the same. Here are some things to think about: 

  • Which kind of personal loan you’re agreeing to. Payday loans, for example, have their own unique risks.
  • Whether the interest rate on your loan will be lower than the interest rate for your credit cards—and how long the rate will last.
  • Whether your personal loan comes with fees or credit insurance that could end up costing you more in the long run.

3. Debt Management Plans

You could also consider setting up a debt management plan through credit counseling. Credit counselors are trained to understand credit card debt and teach people how to manage it. 

You can get help finding credit counselors from the National Foundation for Credit Counseling and the Financial Counseling Association of America. Both are recommended by the CFPB.

Once you find a service, the CFPB also has a list of questions to ask about credit counseling. In general, the agency recommends:

  • Finding a credit counselor who offers a range of services that can be done in person, by phone or online.
  • Finding out about your counselor’s qualifications and avoiding credit counselors who aren’t willing to send you free educational materials or information about themselves.
  • Finding out about fees and contracts. If an organization turns you away because you can’t afford to pay them, you might be better off going somewhere else anyway. 

4. Home Equity Loans or Lines of Credit

Home equity loans allow people to borrow money by using their home as collateral. The amount you’re able to borrow is determined in part by how much equity you have in your home. You can estimate this number by subtracting how much you owe on your mortgage from the current market value of the property.

If you receive a home equity loan in a lump sum, you could use those funds to pay down other debts, including credit cards. 

But a home equity loan can be risky. If you can’t pay it back, you could face foreclosure on your home.

Home equity loans usually have a fixed rate, which means the rate won’t change over time. But it’s worth confirming before accepting a loan. If you’re considering a home equity loan, it also helps to examine whether there are other fees and costs that could make it more expensive than your original debt.

Home Equity Line of Credit (HELOC)

HELOCs, on the other hand, usually have variable interest rates, which means payments could change from month to month. And instead of receiving a lump-sum loan, HELOCs usually function like a credit card. But these types of loans can vary widely. Specifics like when and how you can borrow money and the repayment terms can be unique to your loan. 

Because home equity loans and HELOCs could put your home at risk if you are unable to pay, it’s wise to carefully examine and understand the details of each method before accepting one.

Is Credit Card Consolidation a Smart Financial Decision?

Like most financial decisions, it depends on your situation. In some cases, credit card debt consolidation can help credit card users find better interest rates and simplify payments.

To understand if consolidating credit card debt is the best option for you, take a realistic look at your finances. You should also take a magnifying glass to the terms and conditions of any loan or new credit card you consider. 

As the Consumer Financial Protection Bureau (CFPB) notes, credit card debt consolidation won’t eliminate your debt. And there’s a chance you could end up paying more in the end because of fees, interest and other factors. It may seem obvious, but you should only choose a debt consolidation plan that will help you save money. If you’re unable to find a solution that offers a lower interest rate or affordable monthly payments, it might not be the right option.

Does Consolidating Credit Affect Your Credit Score?

Credit card debt consolidation can affect people’s credit differently. How it affects you depends on your financial situation, the method you use to consolidate your debt and more.

If you want to see where your credit stands, you can get free copies of your credit reports from AnnualCreditReport.com.

CreditWise from Capital One could also help—and it’s free to everyone. It has a tool called the Credit Simulator that lets you explore the potential impact of your financial decisions before you make them. That includes things like taking out a personal loan or opening a new credit card to transfer balances.

The Bottom Line

If paying your credit card bills is a struggle, consolidating credit card debt may offer a way to help you get back on track.

From balance transfer cards to personal loans, there are a number of credit card debt consolidation options. However, debt consolidation isn’t an option for everyone, and it may not be the best option for you. Be sure to do your research before committing to any new credit card or loan. 

In the meantime, if you think you may miss or have already missed a credit card payment, the CFPB recommends reaching out to your credit card company as soon as you think you need help. Your lender may be able to work with you to keep you on track or help you get back on track. Credit card debt consolidation can be a long-term solution, but it isn’t a quick fix. And remember, credit card consolidation cannot eliminate your debt.


We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

Your CreditWise score is calculated using the TransUnion® VantageScore® 3.0 model, which is one of many credit scoring models. It may not be the same model your lender uses, but it can be one accurate measure of your credit health. The availability of the CreditWise tool depends on our ability to obtain your credit history from TransUnion. Some monitoring and alerts may not be available to you if the information you enter at enrollment does not match the information in your credit file at (or you do not have a file at) one or more consumer reporting agencies.

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