12 Best Credit Card Consolidation Loans of 2024

Credit cards have notoriously high interest rates that can make them difficult to pay off. According to the Federal Reserve, the average interest rate on credit cards was 21.47% as of November 2023 (the most recent data). But they can be much higher, especially if you've missed payments or have taken a cash advance. It may feel like you just can’t get ahead. 

But one way to quickly tackle your debt is to use a credit card consolidation loan. Consolidation lets you refinance credit card debt at a lower rate, making it easier to pay off. 

Compare personal loan rates for credit card consolidation

Best credit card consolidation loans

Credit card consolidation loans come in several different forms, including personal loans and home equity loans. Since personal loans are available regardless of your home equity, they make up the “best” list we've compiled below. Plus, personal loans can be used to pay off credit cards within days of applying for one — the same day, in some cases. 

To find a personal loan with a lower rate than the debts you’re aiming to pay off, focus on annual percentage rates (APRs) — the APR includes a loan’s interest rate and any upfront fees, making it a good way to compare options. Also take into consideration each lender’s available loan amounts, repayment terms, fees, and reputation.

Credit card consolidation loans for bad credit

Qualifying for a loan is more challenging when you have bad credit. Lenders generally have a minimum credit score needed to qualify for a loan — a FICO score of 670 or higher is often preferred — and marks on your credit report that can lead to a bad score, such as late or missed payments, can be a red flag to lenders.

The good news is there are several lenders that offer bad-credit consolidation loans. You can learn about them below.

Methodology

We evaluated the best personal loan lenders for credit card consolidation based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Our team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

What is credit card consolidation?

Credit card consolidation is the process of combining one or more credit card balances into one debt with one monthly payment. Credit card consolidation often comes in the form of an installment loan with a fixed interest rate and predictable payments, such as a personal loan or home equity loan. But it can also be achieved via a balance transfer credit card or home equity line of credit.

Credit card consolidation has several key benefits, including a chance to lower your rate or monthly payments, and cut down the time it takes to pay off your debt. It could also lead to an improved credit score, if handled responsibly.

How does credit card debt consolidation work?

When going through credit card consolidation, you first take out a new loan — this is often a personal loan, but it could also be a home equity loan or a balance transfer to another credit card. Next, you use the funds to pay off your credit card debt.

Consolidating credit card debt can be beneficial for a number of reasons. Credit card interest rates are higher on average than personal loan rates — more than 50% higher in the second quarter of 2023, according to data from the Federal Reserve. The interest on credit cards also compounds, unlike on personal loans. This means that the interest owed on your cards is assessed interest itself, until you pay it off. If you pay off your balance in full each month, you don’t have to worry about compound interest — but if you don’t pay off your balance monthly, you do.

With predictable monthly payments, the chance for a lower rate, and simple interest, an installment loan, such as a personal loan, could make it easier to pay down your debt.

How to get a credit card consolidation loan

If you’re using a personal loan to consolidate credit card debt, you can get approved for your loan and receive the funds relatively quickly. Here’s how to get started:

1. Add up your debt balances: Before you can apply for a debt consolidation loan, you need to know just how much you’re consolidating. Start by adding up the total balance on all of your credit cards, as well as any other debt you hope to consolidate with the loan.
2. Check your credit score: Each lender has its own credit score requirements, and you’ll have a better idea of which lenders could be a good fit if you know your score. Additionally, your score can give you an idea of the kind of rate you should expect.
3. Shop around: Once you know your credit score and how much you need to borrow, start shopping around for loans. Narrow down your list to those that offer the right loan amounts and repayment terms.
4. Prequalify: Many lenders allow you to prequalify for a personal loan. This gives you an estimation of the amounts, rates, and terms you may be eligible for, without having to undergo a hard credit inquiry (meaning it won’t affect your score). Prequalification isn’t an offer of credit, however, and your final rate may differ. When you proceed to apply for a loan, the lender will perform a hard credit pull, which can lower your score by a few points temporarily.
5. Apply for your loan: Once you’ve prequalified with multiple lenders, you should have a better idea of which is the best choice. You can then complete the application, which should only take a few minutes. Depending on your credit profile and other qualifications, you may receive a decision quickly, or the lender might need a few days to review your application.
6. Receive your funds: If you are approved, you could receive your loan funds as quickly as the same business day, or within a few days. Loan funds are generally deposited into your bank account, but some lenders offer to send the funds directly to your creditors — and may even offer you a rate discount for doing so.

Home equity loan for debt consolidation

A home equity loan is an installment loan, just like a personal loan. It has a fixed interest rate, fixed monthly payment, and fixed repayment term.

Where a home equity loan differs from a personal loan is that, while a personal loan is usually unsecured, a home equity loan is secured by your home. In other words, when you apply, you must pledge your home as collateral. And, the amount you can borrow will be limited by your home’s equity. You generally can’t borrow more than 80% of your home’s equity, though this can vary.

For example, suppose you have a home worth $300,000 and a mortgage balance of $200,000. If your lender allows you to borrow up to 80% of your home’s equity, you could get a loan of no more than $40,000.

A key benefit of home equity loans is that, because they’re secured by a major asset, they often have lower rates than both personal loans and credit cards. However, because you’re using your home as collateral, you risk losing it if you can’t make your monthly payments.

0% balance transfer credit card

Another way to consolidate high-interest credit card debt is to transfer those balances to another credit card with a low or 0% balance transfer APR. You might find such an offer on a card you already own, or you may need to apply for a new card with a 0% APR balance transfer offer. Note that you'll typically need good credit to qualify for a new card. 

Transferring your balances can be a good approach if you're able to pay them in full before the promotional APR expires — the longest 0% promotional period we found is 21 months, though lenders have offered 0% rates for two years on past promotions. At this point, the APR will adjust to the standard rate. 

If you use a 0% balance transfer offer, don't think of it as a break from making payments. If you do, you could find yourself in an even worse position once the rate adjusts. Bear in mind that balance transfers aren't free. You'll usually be charged a balance transfer fee between 3% and 5%, which will be added to the amount you owe. 

Credit card consolidation loan FAQ

Can I still use my credit card after debt consolidation?

As long as you or your credit card issuer haven’t closed your account, you can use your card after debt consolidation. That doesn’t necessarily mean you should. If you find you struggle to control your spending, it may be best to avoid credit cards. If you feel comfortable using the card and paying it off in full each month, then continue to use it.

What is the best credit card consolidation company?

There’s not necessarily a credit card consolidation company that’s best for everyone. Instead, the lender and type of loan that’s best for you will depend on your type of debt, balance, current interest rates, credit score, and the amount you can afford to pay toward debt each month.

What is credit card refinancing vs. debt consolidation?

Credit card refinancing and debt consolidation both involve using a loan to repay your credit card debt. Essentially, the difference is that consolidation often refers to combining multiple debts into one, rather than just changing the terms of a single debt.