What Is Debt Consolidation, and Should I Consolidate?
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

How to consolidate debt
Get a 0% interest, balance transfer credit card
Get a fixed-rate debt consolidation loan
Compare balance transfer cards and debt consolidation loans
Balance transfer card | Debt consolidation loan | |
---|---|---|
Best for: | Credit card debt only. | Any unsecured debts, including credit cards. |
How it works: | Transfer your credit card balances to the new card, then pay the card off before the promotional period ends. | Use the money from the loan to pay off your debts, then pay back the loan in fixed monthly installments. |
Cost: | No interest during the promotional period, but some cards charge a balance transfer fee (3% to 5% of the amount transferred). | Rates on debt consolidation loans range from 6% to 36%. |
How to qualify: | You’ll need good or excellent credit to qualify. | Borrowers across the credit spectrum can qualify. |
Timeline: | It’s best to pay off your debt during the card’s promotional period, typically lasting 15 to 21 months. | Debt consolidation loans have fixed terms, typically lasting one to seven years. |
Debt consolidation calculator
When to consider debt consolidation
- Your monthly debt payments don’t exceed 50% of your monthly gross income.
- Your credit is good enough to qualify for either a 0% balance transfer card or a debt consolidation loan that has a lower interest rate than your existing debt.
- Your cash flow can consistently cover regular payments toward your debt.
- If you choose a balance transfer card, you can pay it off during the promotional period.
- If you choose a consolidation loan, you can pay it off within one to seven years.
Is debt consolidation a good idea?
How does debt consolidation work?
Does debt consolidation affect your credit?
Can you consolidate debt if you have bad credit?
When debt consolidation isn't worth it
- If your debt load is small — you can pay it off within six months to a year at your current pace — and you’d save only a negligible amount by consolidating, don’t bother. Instead, try a do-it-yourself debt payoff method instead, such as the debt snowball or debt avalanche.
- If the total of your debts is more than half your income, and the calculator above reveals that debt consolidation is not your best option, you’re better off seeking debt relief than treading water.
Article sources
- 1. Consumer Financial Protection Bureau. Truth in Lending Act (TILA) examination procedures. Accessed May 2, 2025.
- 2. Center for Responsible Lending. Payday and Other Small Dollar Loans. Accessed May 2, 2025.
- 3. Consumer Financial Protection Bureau. What is a payday loan?. Accessed May 2, 2025.
- 4. Internal Revenue Service. Retirement Topics - Plan Loans. Accessed Apr 8, 2025.
- 5. Internal Revenue Service. Retirement topics: Exceptions to tax on early distributions. Accessed Apr 8, 2025.
- 6. Administrative Office of the U.S. Courts. Bankruptcy Basics. Accessed Apr 8, 2025.
More like this