Best Debt Consolidation Loans of June 2024

NerdWallet has reviewed more than 35 financial institutions to find the best personal loans for consolidating debt. These are our top picks.

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Written by Jackie Veling
Lead Writer
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Edited by Kim Lowe
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Debt consolidation loans can help you pay off high-interest debt like credit cards. The best debt consolidation loans have low rates, flexible terms and direct payment to your creditors.

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Best Debt Consolidation Loans

Debt consolidation loans: NerdWallet’s guide

Learn how debt consolidation loans work, the pros and cons of consolidating your debt and how to get approved for a debt consolidation loan.

What are debt consolidation loans and how do they work?

Debt consolidation loans are a type of personal loan that combine multiple unsecured debts — such as credit cards, medical bills and payday loans — into one fixed monthly payment, making it easier to get out of debt.

As long as the interest rate on the debt consolidation loan is lower than the average rate of your existing debts, you’ll save money on interest and potentially pay off your debt faster.

Online lenders, banks and credit unions offer debt consolidation loans. Once you’re approved, the lender deposits the loan into your bank account, and you use that money to pay off your debts, so you’re left with only the new loan. Some lenders even pay off your creditors for you.

You then make monthly payments toward the debt consolidation loan until all your debt is paid off. Payments are fixed for the life of the loan, typically two to seven years.

Ask NerdWallet: Should I use a debt consolidation loan to pay off my credit card debt?

“Consolidating credit card debt is usually a smart move, because credit cards have really high interest rates, and when you carry a balance, you end up paying interest on interest. A debt consolidation loan has a fixed interest rate, so it stops the cycle of compounding interest, and rates tend to be lower.

It also gives you a plan. If you’ve only been able to make the minimum payments on your credit cards each month, you probably aren’t making much progress on your debt. A consolidation loan has a clear endpoint, as long as you make the monthly payments on time.”

Jackie Veling, Lead Writer on Debt Consolidation

Credit card debt consolidation loans vs. credit card refinancing

Refinancing credit card debt is similar to consolidation, but instead of getting a debt consolidation loan to pay off your credit cards, you get a low-interest credit card and transfer the balance from one or more of your existing credit cards onto the new card, which is called a balance transfer. You'll likely need good or excellent credit to qualify (690 score or higher).

Are debt consolidation loans a good idea?

A debt consolidation loan is a good idea if you can get a lower annual percentage rate than what you're currently paying on your other debts. The best debt consolidation loan interest rates are reserved for borrowers with good or excellent credit (690 or higher credit score).

Like with all financial decisions, you should carefully weigh the pros and cons of consolidating your debts before you apply for a loan. Here are the main benefits and drawbacks of debt consolidation loans to help you make an informed decision.


You may pay less in interest.

You may get out of debt faster.

You have only one payment.

You have a clear finish line.


You may not qualify for a low enough rate

You still have debt you need to manage. Consolidation won’t fix core spending issues.

Frequently asked questions about debt consolidation

Debt consolidation is a good reason to get a loan, as long as you use the loan to successfully pay off your debts at a lower rate, make on-time payments to your new loan and safely manage debt in the future. Use a debt consolidation calculator to see what you can save.

You can apply for most debt consolidation loans online, including loans from banks and credit unions. A loan application will ask for details about the loan you want, your personal and contact information, and information about your income and any debts. It may require additional documentation, like proof of identity and proof of income.

The minimum credit score for a debt consolidation loan varies by lender. Bad-credit lenders may accept borrowers with credit scores of 629 or less.

To qualify you for debt consolidation, a lender typically looks at your credit score, credit history, income and any existing debts. There are ways to boost your chances of getting approved for a loan, like building your credit and paying off small debts.

You can still use your credit cards after debt consolidation. Consolidating your debts doesn’t close your credit cards, it just pays them off, but be careful about increasing your overall credit utilization and ending up in more debt than before.

Do debt consolidation loans hurt your credit?

Debt consolidation loans can help — and hurt — your credit score. When you use the loan to pay off your credit cards, you lower your credit utilization, which measures how much of your credit limit is tied up.

Ultimately, if you use the debt consolidation loan to pay off your debts and then pay off the new loan on time, the overall effect on your credit should be positive.

How to qualify for a debt consolidation loan

  • Build your credit: Loan approval is based mainly on your credit score and ability to repay.

  • Apply for a joint, co-signed or secured loan: Adding a co-borrower or co-signer to your application can help you qualify for a debt consolidation loan that you wouldn’t be able to on your own because of poor credit or low income.

  • Consider different types of lenders: Compare offers from banks, credit unions and online lenders before choosing the best debt consolidation loan.

Debt consolidation loans for bad credit

You can still get a debt consolidation loan if you have bad credit (a 629 credit score or lower).

Look specifically for lenders that let you pre-qualify with a soft credit check — that way you can check if you meet the lender’s requirements without taking a hit to your credit score. This will also help you check if the rate you qualify for is lower than your existing debts.

How to get a debt consolidation loan

1. Add up current debts and calculate the combined interest rate

The first step in getting a debt consolidation loan is having a clear picture of your current debt. You can use NerdWallet’s debt consolidation calculator to see your total balance, total monthly payment and combined interest rate across all debts.

2. Pre-qualify and compare loan options

One of the best ways to compare loan offers is to pre-qualify with multiple lenders, which lets you see your potential loan terms, including APR, without any effect on your credit score. Though not all banks or credit unions offer pre-qualification, most online lenders do.

3. Apply for a debt consolidation loan

Once you’ve decided on a lender, it’s time to apply for the loan. Most loan applications are online and ask you to supply personal information as proof of identity, employment and income. If you’re approved, you’ll sign the loan agreement and receive the funds, often the same day you’re approved.

4. Pay off creditors

Here’s the most important step: Use the loan proceeds to pay off your existing debts. Some lenders send the funds directly to your creditors, or they’ll deposit the funds in an account of your choosing. Check the accounts to make sure they’re paid off.

5. Begin making payments on your new loan

Personal loan payments are monthly, though there’s usually no fee for paying off a loan early. Make a plan now to manage your personal loan payments

As you make progress on paying off your loan, try to keep your credit card balances at or near zero until you’re debt-free. But avoid closing the accounts, which can lower your credit score.

Alternatives to debt consolidation loans

A debt consolidation loan isn’t your only option for paying off debt.

0% balance transfer credit card: For borrowers with good to excellent credit, transferring debts to a 0% balance transfer card may be a good option — as long as you can pay it off during the introductory period, which can last up to 21 months.

Credit counseling: Nonprofit organizations offer credit counseling, which includes helping you create a debt management plan. Similar to other consolidation products, these plans roll your debts into one manageable payment at a reduced interest rate.

Debt payoff strategies: If you’re not sure how to tackle debt, you may not need to consolidate. The debt snowball and debt avalanche methods are two common strategies for paying off debt. The snowball method focuses on paying off your smallest debt first, building momentum as you go. The avalanche focuses on paying off the debt with the highest interest rate first, then applying the savings elsewhere. Both can boost your payoff speed.

Debt relief: If you have significant debt (40% or more of your income) and no plan to pay it off, you may want to explore other strategies, like debt settlement or bankruptcy. Both options help eliminate unsecured debts, but they hurt your credit and are typically a last resort.


NerdWallet’s review process evaluates and rates personal loan products from more than 35 technology companies and financial institutions. We collect over 50 data points from each lender and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.

Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.

NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.