What Is Debt Consolidation?

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Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

Americans have an average credit card balance of $5,221, according to a 2021 analysis of Experian consumer credit data. While carrying debt is a part of everyday life for many, it can be a costly practice.

Fortunately, debt isn’t permanent, and you have several ways to reduce your debt. One common method is debt consolidation, which streamlines all your debts — typically from high-interest credit cards — into one account with one payment.

Debt consolidation can simplify your finances and potentially reduce your interest charges and monthly payments. Learn more about how it works:

What is debt consolidation?

Debt consolidation allows you to merge several debts into a single account, ideally at a lower interest rate. When you consolidate your debt, you no longer have to make separate payments on multiple credit card or loan accounts. Instead, you’ll only have one payment to manage.

Debt consolidation can help you simplify your finances and may save you money if you can get a lower interest rate. With more of your payment going toward the principal, you could pay off your debt sooner.

Definition: Principal is the amount of money you borrowed. Your lender applies your interest rate to the principal to determine the total amount you must repay, which includes the principal and interest.

How to consolidate debt

Three popular methods can help you consolidate debt:

The best approach to consolidate your debt depends on your financial situation, including your total debt load, the interest rate on your current accounts, and your credit status.

Debt consolidation loan

A debt consolidation loan is a type of unsecured personal loan you can take out with a bank, credit union, or online lender. To apply, visit your local branch or complete an application online. You can also use an online marketplace like Credible to get multiple quotes from personal loan companies without hurting your credit.

Debt consolidation loans are installment loans. You receive a lump sum of money up front that you repay in fixed monthly payments over a set period of time. Loan amounts may range from $100 to $100,000, usually for around $8,000, according to the U.S. Chamber of Commerce.

You’ll generally need a credit score of at least 670 to qualify, although some lenders specialize in working with borrowers with bad credit. Here are the credit score ranges and their corresponding ratings:

credit score ranges

If your credit score is preventing you from getting a debt consolidation loan, consider applying with an eligible cosigner or taking time to improve your credit before applying for a loan.

The personal loan companies in the table below compete for your business through Credible. You can request rates from all of these partner lenders by filling out just one form (instead of one form for each) and without affecting your credit score.

Lender Fixed rates Loan amounts

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

9.95% – 35.99% APR $2,000 to $35,000**
  • Fixed APR: 9.95% – 35.99% APR
  • Variable APR: N/A
  • Min. credit score: 550
  • Loan amount: $2,000 to $35,000**
  • Loan terms (years): 2, 3, 4, 5*
  • Time to fund: As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
  • Fees: Origination fee
  • Discounts: Autopay
  • Eligibility: Available in all states except CO, IA, HI, VT, NV NY, WV
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Loan servicer: Avant
  • Loan Uses: Debt consolidation, emergency expense, life event, home improvement, and other purposes
  • Min. Income: $1,200 monthly

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

7.79% – 14.99% APR $10,000 to $50,000
  • Fixed APR: 7.79% – 14.99% APR
  • Variable APR: N/A
  • Min. credit score: 700
  • Loan amount: $10,000 to $50,000
  • Loan terms (years): 3 to 6
  • Time to fund: Next business day
  • Fees: No prepayment penalty
  • Discounts: None
  • Eligibility: Available in all 50 states
  • Customer service: Phone
  • Soft credit check: Yes
  • Min. Income: Does not disclose
  • Loan Uses: Debt consolidation, home improvement, self-employment, and other purposes

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

4.99% – 35.99% APR $5,000 to $50,000
  • Fixed APR: 4.99% – 35.99% APR
  • Variable APR: N/A
  • Min. credit score: 600
  • Loan amount: $2,000 to $50,000
  • Loan terms (years): 2, 3, 4, 5
  • Time to fund: As soon as 1 to 3 business days after successful verification
  • Fees: Origination fee
  • Discounts: None
  • Eligibility: Available in all states except DC, IA, VT, and WV
  • Customer service: Phone
  • Soft credit check: Yes
  • Loan servicer: Best Egg and Blue Ridge Bank
  • Min. Income: None
  • Loan Uses: Credit card refinancing, debt consolidation, home improvement, and other purposes

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

5.99% – 24.99% APR $2,500 to $35,000
  • Fixed APR: 5.99% – 24.99% APR
  • Min. credit score: 660
  • Loan amount: $2,500 to $35,000
  • Loan terms (years): 3, 4, 5, 6, 7
  • Time to fund: As soon as the next business day after acceptance
  • Fees: Late fee
  • Discounts: None
  • Eligibility:  Available in all 50 states
  • Customer service: Phone
  • Soft credit check: Yes
  • Loan Uses: Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

7.99% – 29.99% APR $7,500 to $50,000
  • Fixed APR: 7.99% – 29.99% APR
  • Min. credit score: Does not disclose
  • Loan amount: $10,000 to $50,000
  • Loan terms (years): 2, 3, 4, 5
  • Time to fund: As soon as 2 business days
  • Fees: Origination fee
  • Discounts: No
  • Eligibility: Available in all states except CO, CT, HI, KS, NH, NY, ND, OR, VT, WV, WI, and WY
  • Customer service: Phone
  • Soft credit check: Yes
  • Min. Income: None
  • Loan Uses: Debt consolidation, home improvement, wedding, travel, medical expenses, and other purposes

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

5.99% – 24.99% APR $5,000 to $40,000
  • Fixed APR: 5.99% – 24.99% APR
  • Min. credit score: 600
  • Loan amount: $5,000 to $40,000
  • Loan terms (years): 2, 3, 4, 5
  • Time to fund: As soon as 2 to 5 business days after verification
  • Fees: Origination fee
  • Discounts: None
  • Eligibility: Available in all states except MA and NV
  • Customer service: Phone, email, chat
  • Soft credit check: Yes
  • Min. Income: None
  • Loan Uses: Debt consolidation and credit card consolidation only

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

7.04% – 35.89% APR $1,000 to $40,000
  • Fixed APR: 7.04% – 35.89% APR
  • Min. credit score: 600
  • Loan amount: $1,000 to $40,000
  • Loan terms (years): 3, 5
  • Time to fund: Usually takes about 2 days
  • Fees: Origination fee
  • Discounts: None
  • Eligibility: Available in all 50 states
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Loan servicer: LendingClub Bank
  • Min. Income: None
  • Loan Uses: Debt consolidation, paying off credit cards, home improvement, pool loans, vacations, and other purposes

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

7.99% – 35.99% APR $2,000 to $36,500
  • Fixed APR: 7.99% – 35.99% APR
  • Min. credit score: 580
  • Loan amount: $2,000 to $36,500
  • Loan terms (years): 2, 3, 4, 5, 6
  • Time to fund: As soon as the next business day
  • Fees: Origination fee
  • Discounts: Autopay
  • Eligibility: Available in all states except NV and WV
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. Income: $20,000
  • Loan Uses: Home improvement, consolidate debt, credit card refinancing, relocate, make a large purchase, and other purposes

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

3.99% – 19.99% APR $5,000 to $100,000
  • Fixed APR: 3.99% – 19.99% APR
  • Min. credit score: 660
  • Loan amount: $5,000 to $100,000
  • Loan terms (years): 2, 3, 4, 5, 6, 7*
  • Time to fund: As soon as the same business day
  • Fees: None
  • Discounts: Autopay
  • Eligibility: Available in all states except RI and VT
  • Customer service: Phone, email
  • Soft credit check: No
  • Loan servicer: LightStream
  • Min. Income: Does not disclose
  • Loan Uses: Credit card refinancing, debt consolidation, home improvement, and other purposes

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

6.99% – 19.99% APR1 $3,500 to $40,0002
  • Fixed APR: 6.99% – 19.99% APR1
  • Min. credit score: 660
    (TransUnion FICO®️ Score 9)
  • Loan amount: $3,500 to $40,0002
  • Loan terms (years): 3, 4, 5, 6
  • Time to fund: Many Marcus customers receive funds in as little as three days
  • Fees: None
  • Discounts: Autopay
  • Eligibility: Available in all 50 states
  • Customer service: Phone
  • Soft credit check: Yes
  • Loan servicer: Goldman Sachs
  • Min. Income: $30,000
  • Loan Uses: Credit card refinancing, debt consolidation, home improvement, major purchase, and other purposes

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

18.0% – 35.99% APR $1,500 to $20,000
  • Fixed APR: 18.0% – 35.99% APR
  • Min. credit score: None
  • Loan amount: $1,500 to $20,000
  • Loan terms (years): 2, 3, 4, 5
  • Time to fund: As soon as the same day, but usually requires a visit to a branch office
  • Fees: Origination fee
  • Discounts: None
  • Eligibility: Must have photo I.D. issued by U.S. federal, state or local government
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. Income: Does not disclose

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

6.74% – 17.99% APR $600 to $50,000
(depending on loan term)
  • Fixed APR: 6.74% – 17.99% APR
  • Min. credit score: 660
  • Loan amount: $600 to $50,000*
  • Loan terms (years): 1, 2, 3, 4, 5
  • Time to fund: 2 to 4 business days after verification
  • Fees: None
  • Discounts: None
  • Eligibility: Does not disclose
  • Customer service: Phone, email
  • Soft credit check: No
  • Min. Income: Does not disclose
  • Loan Uses: Debt consolidation, home improvement, transportation, medical, dental, life events

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

7.95% – 35.99% APR $2,000 to $40,000
  • Fixed APR: 7.95% – 35.99% APR
  • Min. credit score: 640
  • Loan amount: $2,000 to $40,000
  • Loan terms (years): 3, 5
  • Time to fund: As soon as one business day
  • Fees: Origination fee
  • Discounts: None
  • Eligibility: Available in all states except IA, ND, WV
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. Income: None
  • Loan Uses: Debt consolidation, home improvement, vehicles, small business, new baby expenses, and other purposes

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

5.99% – 35.99% APR $3,500 to $40,000
  • Fixed APR: 5.99% – 35.99% APR
  • Min. credit score: 600
  • Loan amount: $3,500 to $40,000
  • Loan terms (years): 2, 3, 4, 5
  • Time to fund: 90% funded within a day13
  • Fees: Origination Fee, $15 Late Fee, $25 NSF Fee
  • Discounts: None
  • Eligibility: Available in all states except CO, CT, ME, NV, NH, TN, VT, WV, WY, and all U.S. Territories
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Loan servicer: Reach Financial
  • Min. Income: $1,000 monthly
  • Loan Uses: Debt consolidation, credit card refinancing

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

6.99% – 22.23% APR10 $5,000 to $100,000
  • Fixed APR: 6.99% – 22.23% APR10
  • Min. credit score: Does not disclose
  • Loan amount: $5,000 to $100,000
  • Loan terms (years): 2, 3, 4, 5, 6, 7
  • Time to fund: 3 business days
  • Fees: None
  • Discounts: Autopay
  • Eligibility: Available in all states except MS
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. Income: Does not disclose
  • Loan Uses: Solely for personal, family, or household uses

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

11.69% – 35.93% APR7 $1,000 to $20,000
  • Fixed APR: 11.69% – 35.93% APR7
  • Min. credit score: 560
  • Loan amount: $1,000 to $50,000
  • Loan terms: 3 to 5 years 8
  • Time to fund: Within one day, once approved9
  • Loan types: Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
  • Fees: Origination fee
  • Discounts: Autopay
  • Eligibility: A U.S. citizen or permanent resident; not available in DC, SC, WV
  • Customer service: Phone, email
  • Soft credit check: Yes

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

6.95% – 35.97% APR $1,000 to $50,000
  • Fixed APR: 6.95% – 35.97% APR
  • Min. credit score: 560
  • Loan amount: $1,000 to $50,000*
  • Loan terms (years): 2, 3, 5, 6
  • Time to fund: Within a day of clearing necessary verifications
  • Fees: Origination fee
  • Discounts: Autopay
  • Eligibility: Available in all states except West Virginia
  • Customer service: Email
  • Soft credit check: Yes
  • Min. Income: Does not disclose
  • Loan Uses: Debt consolidation, credit card refinancing, home improvement, and other purposes

Credible Rating

Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.

5.4% – 35.99% APR4 $1,000 to $50,0005
  • Fixed APR: 5.4% – 35.99% APR4
  • Min. credit score: 580
  • Loan amount: $1,000 to $50,0005
  • Loan terms (years): 3 to 5 years4
  • Time to fund: As fast as 1 business day6
  • Fees: Origination fee
  • Discounts: None
  • Eligibility: Available in all 50 states
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. Income: $12,000
  • Loan Uses: Payoff credit cards, consolidate debt, take a course or bootcamp, relocate, make a large purchase, and other purposes
Compare rates from these lenders without affecting your credit score. 100% free!Compare Now
All APRs reflect autopay and loyalty discounts where available | LightStream disclosure | 10SoFi Disclosures | Read more about Rates and Terms

Balance transfer credit card

Balance transfer credit cards allow you to transfer balances from your current cards to a new card with 0% interest for an introductory period of up to 21 months. Since all your money goes toward paying off your balance interest-free, you can make a substantial dent in your debt during this period. Keep in mind that once the introductory period ends, you’ll start accruing interest on any remaining balance.

You’ll typically need a FICO credit score of 670 or higher to be eligible for a balance transfer credit card. Also, some cards charge a balance transfer fee — usually 3% to 5% of the transferred amount — which could offset any savings generated through debt consolidation. Another factor to consider is that the credit limit on the new card may not be enough to transfer all your credit card debt.

Check out: Debt Consolidation Loan vs. Credit Card Refinancing: How to Choose

Home equity loan

As a homeowner, you can consolidate your debt by accessing the equity in your house. Lenders typically allow you to borrow up to 80% of your home’s equity. So, if you have $25,000 in home equity, you could borrow up to $20,000 to pay off credit cards, likely with a substantially lower interest rate than your unsecured credit cards’ rates.

Still, it’s essential to understand that a home equity loan can be risky because it requires you to offer up your home as collateral. As such, if you fall behind on your payments, you run the risk of losing your home to foreclosure.

Learn more: Home Equity Loan vs. Personal Loan: Which Is Right for You?

When is debt consolidation a good idea?

Ideally, debt consolidation can make your finances easier to manage and potentially save you money in the process. But debt consolidation isn’t a magic wand to eradicate debt, so consider it only when it makes sense, such as when:

  • You have high-interest debt. If you’re paying excessive interest rates on multiple credit cards, debt consolidation may be a good option, especially if your credit is significantly better than when you applied for your cards.
  • You have good or excellent credit. You’ll need strong credit to qualify for a low-interest debt consolidation loan or a 0% interest balance transfer credit card.
  • Your monthly debt payments aren’t more than 50%. Many banks and lenders won’t work with borrowers with debt-to-income ratios of more than 50%. Your DTI ratio is the amount you pay toward your recurring monthly bills compared to your gross monthly income.
  • You can repay your debt consolidation loan in five years or less. Debt consolidation loans are structured installment loans with a defined payoff date, typically for two to five years. But the longer your repayment term, the more interest you’ll pay, so try to pay off the loan within five years or less to minimize interest costs.
  • You want to get rid of your revolving debt for good. Debt consolidation may make it easier to tackle your debt once and for all. But take caution not to rack up debt on your newly paid-off credit cards. You’ll only compound the problem by adding more monthly payments while voiding the benefits of debt consolidation.

Here’s an example that illustrates when a debt consolidation loan may be worthwhile:

Say you have a credit card with a $5,000 balance and a 20% APR and you make the minimum payment of $135 every month. It would take you five years to pay off the credit card, and you’d pay a total of $2,845 in interest — more than half the original balance.

If you have good credit, you may qualify for an unsecured debt consolidation loan with an interest rate of 10% and a monthly payment of $161 per month. You’d pay off the loan in three years instead of five, and you’d only pay $808 in total interest.

Use our personal loan calculator below to estimate your monthly payments. Simply enter the loan amount, interest rate, and loan term to see how much you’ll pay over the life of the loan.

Enter your loan information to calculate how much you could pay

Total Payment $
Total Interest $
Monthly Payment $

With a $ loan, you will pay $ monthly and a total of $ in interest over the life of your loan. You will pay a total of $ over the life of the loan.

When is debt consolidation a bad idea?

As beneficial as debt consolidation can be, it’s not always a good idea. Here are some instances when debt consolidation may not be your best move:

  • Your total debt balance is low. If your debts are low enough to pay off in less than a year with your regular payments, the benefits of debt consolidation could be negligible or even nonexistent. Remember, some debt consolidation loans and balance transfer cards charge origination fees and balance transfer fees, respectively, which could wipe out any savings from consolidating your debt.
  • Your debt-to-income ratio is more than 50%. In this case, you may be better served with a debt management plan, where a debt settlement company attempts to negotiate a lower balance or interest rate with your creditors. You make one payment to the debt settlement company, who pays your creditors on your behalf.

Learn more: What Is Your Debt-to-Income-Ratio? How to Calculate DTI

Utilize a debt payment strategy

If you’re not keen on debt consolidation, you might consider wiping out your debts with a debt payoff strategy, such as the debt avalanche method or the debt snowball method. Both these strategies may provide a viable path to eliminating your debt:

  • The debt avalanche method helps you tackle your credit cards with the highest interest first. You pay the minimum balance on all your credit cards while paying as much as possible toward the credit card with the highest interest rate. Once you pay that credit card in full, you add that card’s old payment to the pot and use it to pay off the credit card with the next-highest interest, and so on. The debt avalanche method may save you the most in interest charges in the long run.
  • Similarly, the debt snowball method involves making minimum payments on all your credit card accounts except one. Only in this case, you’ll direct the most money toward the credit card with the smallest balance until it has a zero balance. You’ll then take the money you were paying on that card and apply it toward the credit card with the next-lowest balance, and so on. Paying off debt in this manner creates small wins that build momentum and motivation, similar to how some dieters feel motivated when they see a lower weight on their scale.

No matter which method you choose, debt consolidation is a valuable way to tackle debt. As with any financial strategy or product, always weigh the pros and cons before making a decision.

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About the author
Tim Maxwell
Tim Maxwell

Tim Maxwell is a financial writer with over two decades of experience. Tim’s work has appeared in USA Today, Washington Post, Bankrate, LendingTree, Fox Business, Credible and more. He also publishes Incomist, a personal finance site that focuses on paying off debt by earning extra income in creative ways.

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