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. And it’s especially true when you fall behind on bills. 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 of consolidating credit card debt, including potential risks and benefits.

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 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 have. Some credit cards even offer 0% introductory rates to start, but that rate may last for a limited 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.

But 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. 

Things to Consider Before Consolidating Credit Card Debt

Consolidating your credit card debt can be a big decision. Before making any moves, it might help to look at how it could impact your financial situation. Here are three places to start:

1. Current Debt

Taking a look at your total credit card debt is a good first step. Knowing where you’re starting from can help you set goals around paying down or paying off your debt.

And you can use this credit card debt calculator from Capital One® to help. It’s simple to use. Just enter a balance, annual percentage rate (APR) and any annual fees. You can then calculate estimates in two ways:

  1. By setting a monthly payment amount, which tells you how long it may take to pay down the balance you entered.
  2. By setting the amount of time to pay down the balance, which tells you how much your monthly payments might need to be. 

You can easily toggle between the two options. And both will show you the total interest you may be charged.

By playing around with the calculator a little, you can learn how much it might cost you to pay down your credit card balances. You can enter amounts for each of your current balances or add them all up and enter the total to see how a consolidated payment might look.

2. Spending and Budgeting

When considering credit card consolidation, you can also review your monthly spending. This gives you a chance to examine your income and expenses, including how much you’re putting toward debt.

Once you know your monthly spending, the CFPB recommends creating a budget. It can help you see whether there are changes to your spending you can make to pay down your credit card debt. 

If you know how much you’ll be able to put toward your payment each month, the credit card debt calculator could help you determine how long it will take to pay off your balances. But be aware that continuing to use credit could make it harder to pay off what you owe. 

And the CFPB also advises that consolidating your credit card debt isn’t likely to help if you’re spending more than you’re earning.

3. Credit Scores

Finally, your credit score may also play a role in any decision to consolidate your credit card debt. If your credit score is less than perfect, it may affect the interest rate you’re offered on a consolidation loan or a new line of credit.

It’s also worth examining how your score might be affected if you choose to consolidate your debt. Getting a new loan or credit card will likely require a credit check. And recent credit inquiries play a part in your credit score. 

A new loan or card will also affect your total available credit and the amount of credit you’re using—two other factors that affect your credit score. And it’s also helpful to investigate how closing your old credit card accounts may impact your score, especially if they’re your oldest lines of credit.

Credit can be complicated. But the CFPB has lots of information that may help you better understand credit scores.

Methods to Consolidate and Manage Credit Card Debt

Remember, just because it’s possible to consolidate credit card debt doesn’t mean that it’s always right for everyone. If you decide credit card debt consolidation is right for you, there are several ways you can do it. There may also be other ways to manage your debt. Here are a few examples:

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.
  • 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. Credit Counseling Agencies

You could also consider 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.

Potentially Risky Debt Consolidation Methods

When searching for the right way to consolidate debt, you might come across other riskier options. These credit card debt consolidation options could have additional drawbacks you’ll want to consider before making any commitments. 

1. Home Equity Loans

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 the home. You can estimate this number by subtracting how much you owe on your mortgage from the current market value of the property.

According to the CFPB, you receive a home equity loan in a lump sum. And like a personal loan, 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.

2. Home Equity Lines of Credit

Home equity lines of credit are similar to home equity loans. And they come with the same risk of losing your home. But home equity lines of credit, called HELOCs for short, differ in a few ways.

HELOCs 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. 

It’s wise to examine and understand the details of a HELOC before accepting one.

3. Debt Settlement Companies

You might have heard advertisements for debt settlement companies. They claim they can negotiate a settlement with credit card companies on your behalf. But working with debt settlement companies can be risky, according to the CFPB.

That’s because settlement companies often charge expensive fees. They also typically encourage clients to stop paying bills altogether, which may keep you from being able to use your credit cards in the future. It can also result in late fees and other penalties. Unless the company actually settles your debt, any savings could be wiped out by those additional costs. And your credit score could take a hit, too.

In the end, the CFPB says debt settlement companies could leave you in deeper debt than where you started.

Is Consolidating Credit Card Debt Bad for Your Credit?

Credit card debt consolidation can affect people’s credit differently. How it affects yours 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.

Explore Your Options for Credit Card Debt Relief

Credit card debt consolidation is just one way to manage credit card debt. To decide whether it’s right for you, it may help to examine other credit card debt relief options. Learning ways to cut expenses may also be helpful.

If paying your credit card bills is a struggle, consolidating credit card debt may offer a way to help you get back on track. But 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 credit card company may be able to work with you to keep you on track or help you get back on track. 


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