How to Consolidate Credit Card Debt: 5 Best Options
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Best way to consolidate credit card debt
1. Apply for a credit card consolidation loan
Pros
Fixed interest rate means your monthly payment won’t change.
Low APRs for good to excellent credit.
Direct payment to creditors offered by some lenders.
Cons
Hard to get a low rate with bad credit.
Some loans carry an origination fee.
2. Roll your debts onto a balance transfer credit card
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.
3. Enter a debt management plan
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.
It may take three to five years to repay your debt.
4. Tap your home equity for a loan or line of credit
Pros
Typically lower interest rates than personal loans.
May not require good credit to qualify.
Long repayment period keeps payments lower.
Cons
You need equity in your home to qualify, and a home appraisal is usually required.
Secured with your home, which you can lose if you default.
5. Borrow from your 401(k)
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.
If you lose or leave your job, you may have to quickly pay back your loan.
What is credit card consolidation?
How does credit card consolidation work?
Is it a good idea to consolidate credit card debt?
Can I still use my credit card after debt consolidation?
How can I consolidate credit card debt without hurting my credit?
How much does credit card debt consolidation save?
Article sources
- 1. National Credit Union Administration. Payday Alternative Loans Final Rule. Accessed Apr 17, 2025.
- 2. National Bureau of Economic Research. Prodigals and Projecture: An Economic History of Usury Laws in the United States from Colonial Times to 1900. Accessed May 2, 2025.
- 3. Federal Register. Federal Interest Rate Authority: A Rule by the Federal Deposit Insurance Corporation on 07/22/2020. Accessed May 2, 2025.
- 4. Federal Reserve Bank of St. Louis. Finance Rate on Personal Loans at Commercial Banks, 24 Month Loan. Accessed May 23, 2025.
- 5. Consumer Financial Protection Bureau. What Is a Debt Relief Program and How Do I Know if I Should Use One?. Accessed Jan 16, 2025.
- 6. Experian and Oliver Wyman. Financial Inclusion and Access to Credit. Accessed Jan 23, 2025.
- 7. Internal Revenue Service. Canceled debt – Is it taxable or not?. Accessed Apr 1, 2025.
- 8. Consumer Financial Protection Bureau. What is a payday loan?. Accessed Apr 17, 2025.
- 9. National Credit Union Administration. Credit Union and Bank Rates 2024 Q4. Accessed May 23, 2025.
- 10. Federal Reserve. Military Lending Act. Accessed May 2, 2025.
- 11. Consumer Financial Protection Bureau. Consumer Use of Buy Now, Pay Later and Other Unsecured Debt. Accessed Jan 24, 2025.
- 12. Center for Responsible Lending. Unsafe Harbor: The Persistent Harms of High-Cost Installment Loans. Accessed May 2, 2025.
- 13. Angi.com. How Much Does It Cost to Make My Home Accessible?. Accessed Nov 12, 2024.
- 14. Consumer Financial Protection Bureau. What are the costs and fees for a payday loan?. Accessed Jun 6, 2025.
- 15. Internal Revenue Service. Home energy tax credits. Accessed Mar 6, 2024.
- 16. Center for Responsible Lending. Unsafe Harbor: The Persistent Harms of High-Cost Lending. Accessed Jun 6, 2025.
- 17. Solar Energy Industries Association. Solar Power Purchase Agreements. Accessed Mar 7, 2024.
- 11. Consumer Financial Protection Bureau. Consumer Use of Buy Now, Pay Later and Other Unsecured Debt. Accessed Jan 27, 2025.
- 19. SolarReviews.com. Homes with Solar Sell for 6.8% More [2024 Zillow Data Study]. Accessed Dec 10, 2024.
- 20. Internal Revenue Service. Retirement Topics - Plan Loans. Accessed Apr 8, 2025.
- 8. Consumer Financial Protection Bureau. What is a payday loan?. Accessed Apr 4, 2025.
- 22. The Pew Charitable Trusts. Payday Loans Cost 4 Times More in States With Few Consumer Protections. Accessed Apr 4, 2025.
- 10. Federal Reserve. Military Lending Act. Accessed Apr 4, 2025.
- 24. Internal Revenue Service. Retirement topics: Exceptions to tax on early distributions. Accessed Apr 8, 2025.
- 25. Administrative Office of the U.S. Courts. Bankruptcy Basics. Accessed Apr 8, 2025.
- Best way to consolidate credit card debt
- What is credit card consolidation?
- How does credit card consolidation work?
- Is it a good idea to consolidate credit card debt?
- Can I still use my credit card after debt consolidation?
- How can I consolidate credit card debt without hurting my credit?
- How much does credit card debt consolidation save?
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