Thirty-seven percent of all U.S. adults carried a credit card balance at least once in the past year, according to the Federal Reserve’s most recent SHED report, published in May 2026.
While occasionally carrying a balance may work for your finances, carrying a balance long-term can spiral out of control. The higher the balance gets, the harder it becomes to pay off, as interest accumulates on top of the original debt.
Consolidation breaks this cycle by moving high-interest credit card debt onto a lower-interest product, so it’s easier to pay off.
What’s the best way for me to consolidate credit card debt?
The best way to consolidate depends on how much debt you have, your credit score and other factors. Here are five effective and safe ways to pay off your credit card debt.
1. Apply for a credit card consolidation loan
Best for: Borrowers across the credit spectrum who have unsecured debt and may need a few years to pay it off.
Pros
Fixed monthly payments
Low APRs for borrowers with good to excellent credit
Some lenders offer direct payment to creditors
Cons
Hard to get a low rate with bad credit
Some loans carry an origination fee
Credit card consolidation loans (also called debt consolidation loans) are fixed-rate loans that come in a lump-sum. These loans range from $1,000 to $50,000 and have terms up to seven years. You can apply for a consolidation loan at your local credit union, bank or through an online lender.
Online lenders in particular offer fast debt consolidation loans for borrowers, including those with imperfect credit. Most also let you pre-qualify without affecting your credit score, which is less common among banks and credit unions. Pre-qualifying gives you a preview of the rate, loan amount and term you may get once you formally apply.
Look for lenders that offer special features for debt consolidation. Some lenders, for example, will discount the rate on a debt consolidation loan or send the loan funds directly to your creditors, simplifying the process.
Use NerdWallet’s debt consolidation calculator to enter all of your debts in one place, see typical rates from lenders and calculate savings.
» COMPARE: Our top picks for debt consolidation loans
2. Roll your debts onto a balance transfer credit card
Best for: Borrowers with good to excellent credit scores who can pay off their credit card debt in under two years.
Pros
0% introductory APR period
A year or more to pay off debt without interest
Cons
Requires good to excellent credit to qualify
Usually carries a balance transfer fee
Higher APR kicks in after the introductory period
Also called credit card refinancing, this option transfers credit card debt to a balance transfer credit card. There's no interest for a promotional period, typically 15 to 21 months. You’ll need good to excellent credit (a score in the mid-600s or higher) to qualify.
A good balance transfer card will not charge an annual fee, but many issuers charge a one-time balance transfer fee of 3% to 5% of the amount transferred. Use NerdWallet’s balance transfer savings calculator to see whether the interest you save over time will wipe out the cost of the fee.
Aim to pay your balance down completely before the 0% intro APR period is over. Any remaining balance after that time will have a regular credit card interest rate.
3. Enter a debt management plan
Best for: Borrowers with credit card debt who have low credit scores and can commit to a payment plan up to five years.
Pros
Fixed monthly payments
May cut your interest rate by half
Doesn't hurt your credit score
Cons
Startup fees and monthly fees are common
May take three to five years to repay your debt
Must close your credit cards
Nonprofit credit counseling agencies offer debt management plans, which roll your credit card balances into one monthly payment at a reduced interest rate. You then make the monthly payment to the agency, which disburses the funds to your creditors. With this method, you should be out of debt in three to five years.
Since there’s no credit score requirement, these plans work best for those who are struggling to pay off credit card debt but don’t qualify for other options.
DMPs typically come with a small fee, so verify the fee amounts and how they affect your overall payoff plan before making a commitment. You’ll also need to close your enrolled credit cards, though you can typically leave one open for emergencies.
4. Tap your home equity for a loan or line of credit
Best for: Borrowers with sufficient home equity who are comfortable using their home as collateral for a loan or line of credit.
Pros
Lower interest rates than unsecured loans
May not require good credit to qualify
Long repayment period keeps payments lower
Cons
Need equity in your home to qualify
Usually requires a home appraisal
If you’re a homeowner, you may be able to take out a loan or line of credit on the equity in your home and use it to pay off your credit cards.
A home equity loan is a lump-sum loan that you pay back with a fixed interest rate, meaning you’ll have predictable monthly payments and a clear finish line.
A HELOC, or home equity line of credit, works like a credit card with a variable interest rate that is typically lower than credit card rates.
Since both of these types of credit are secured by your house, you’re likely to get a lower rate than what you would find on a personal loan or balance transfer credit card. But you can also lose your home if you don’t keep up with payments.
» LEARN MORE: Should you use home equity to pay off debt?
5. Borrow from your 401(k)
Best for: Borrowers with an employer-sponsored retirement account who can’t qualify for credit elsewhere and have ruled out all other options.
Pros
Lower interest rates than unsecured loans
No impact on your credit score
Cons
Reduces your retirement fund
Heavy penalty and fees if you can't repay
May have to quickly repay if you lose or leave your job
If you have an employer-sponsored retirement account like a 401(k) plan, you can typically borrow up to half the amount (with a $50,000 maximum), for a term up to five years, to help pay off your debts.
These loans usually come with single-digit interest rates, so they’re much cheaper than credit cards, and any interest you pay goes back into your account. Another benefit is this loan won’t show up on your credit report, so there’s no impact on your score, unlike other borrowing options.
But taking out a 401(k) loan is very risky. It can significantly impact your retirement savings. And if you can’t repay, you’ll owe a hefty penalty plus taxes on the unpaid balance, so you may be left struggling with more debt.
Plus, if you lose your job or quit, the loan is automatically due on tax day of the next year.
» LEARN MORE: Risks and benefits of a 401(k) loan
🤓 Nerdy Tip
If your credit card debt is more than 40% of your income and can’t be repaid within five years, bankruptcy may be a better option than the consolidation methods listed above. Frequently asked questions about credit card consolidation
Is it a good idea to consolidate my credit card debt?
Consolidating credit card debt is a good idea if you can qualify for a low enough interest rate and pay off the debt during the allotted time period. That amount of time varies based on the consolidation product you choose.
You’ll also want to be certain you can keep your credit card balances at or near zero while you pay off the new debt. For example, if you take out a consolidation loan to pay off your credit cards, but then accumulate a balance on your credit cards again, you’ll be in a worse position than when you started.
Can I still use my credit cards after consolidating?
If you consolidate your credit cards, you can still use them. Consolidating just means you’re paying them off, so your balances will be at zero, but the cards themselves will remain open unless you take the step of closing them.
Closing a credit card can hurt your credit score. Financial experts often suggest tying a small recurring expense, like your monthly phone bill, to the card to keep it active. Avoid paying for nonessential expenses with your credit card, since this could delay getting out of debt.
How does consolidation affect my credit score?
Consolidating credit card debt will affect your credit in a few ways. Your credit score may dip when a lender or card issuer does a hard credit inquiry after you apply for a consolidation product. This is usually a small dip (just a few points) and temporary.
Late payments, though, can more seriously hurt your credit, so pay attention to due dates and make all payments on-time. Many lenders offer autopay.
If you make payments on time and keep debt manageable in the future, the overall effect of consolidating credit card debt could be positive.
How much money will I save?
How much money you save with credit card debt consolidation will depend on the amount of debt you have and the consolidation option you choose.
Example of how much you could save:
Let’s say you have $10,000 in credit card debt spread out across four different credit cards, each with an annual percentage rate of about 23%. If you’re making a minimum payment of $75 on each card, it will take you four and a half years to be debt-free, and it will cost you an extra $6,200 in interest, on top of the original debt.
But if you take out a credit card consolidation loan for $10,000 at 15% APR, and use it to pay off all your credit cards at once, you’ll save over $2,800 on interest and get out of debt six months sooner.
Plug in your own credit card balances below to see your overall debt picture, plus learn which consolidation option may be the best fit based on your credit score.
