Best Credit Card Consolidation Loans in January 2025

A credit card consolidation loan can simplify debt repayment, save you money, and even improve your credit score. Happy Money offers the best credit card consolidation loans, based on a comparison of more than 800 data points across 31 lenders. Its signature product, The Payoff Loan, is designed specifically for paying off credit cards and other kinds of debt.

Best credit card consolidation loans

A personal loan for credit card consolidation provides a lump sum to pay off one or more credit cards, leaving you with a single, lower monthly payment and/or a lower APR.

Methodology

To find the best credit card consolidation loans, Credible evaluated 31 lenders. As the first of several criteria, we narrowed the list to lenders offering personal loans to consolidate credit card debts. We then prioritized those offering low rates, few or no fees, discounts for direct payments to creditors, and loans for bad credit and fair credit.

Our team of personal loan experts gathered information from our partners, plus lender websites and customer service departments. We assigned star ratings based on the following weighted categories:

• Rates and fees: 18%
• Loan terms: 18%
• Customer experience: 17%
• Eligibility: 14%
• Customer satisfaction: 10%
• Efficiency: 10%
• Options for poor credit and no credit: 9%
• Discounts: 4%

To ensure accuracy, each data point was verified by a third party. Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.

Tips on comparing credit card consolidation loans

Credit card consolidation loans vary by lender. To find the right one for you, prequalify with several lenders, then compare quotes based on the following factors:

• Annual percentage rate (APR): A credit card consolidation loan's APR should be lower than the average rate of the cards you're consolidating to save money. The lower the rate, the more money you can save.
• Origination fees: In addition to interest, some lenders charge origination fees that are deducted from your loan proceeds upfront.For example, a 5% origination fee deducted upfront from a $10,000 loan would mean you'd receive $9,500. To pay off exactly $10,000 in credit card debt, you would need to borrow $10,526 if there's a 5% origination fee.
• Repayment terms: Credit card consolidation loan repayment terms often range from 2 to 7 years but vary by lender. Shorter terms can mean higher monthly payments, but you'll pay less interest over the course of the loan's term. You also might qualify for a lower APR on a shorter-term loan.
• Available loan amounts: The amount of debt you're consolidating will determine how much you need to borrow. Some lenders, like Best Egg, cap loans around $50,000. Others offer much higher loan amounts, such as LightStream (up to $100,000) and BHG (up to $200,000). The amount you can borrow depends on your credit score, credit history, and other financial qualifications.
• Eligibility requirements: To qualify for a loan, you need to meet certain requirements, such as credit score minimums or debt-to-income ratio (DTI) maximums. Some lenders only consider borrowers with good credit (a FICO score between 670 and 739) or excellent credit and higher (a FICO score of 740 or more). Others consider applicants with lower credit scores. Upstart, for example, requires a minimum credit score of 620, which is near the middle of the fair credit range.

Learn More: How To Compare Personal Loans

Compare: APR vs. Interest Rate on a Personal Loan

What is a credit card consolidation loan?

A credit card consolidation loan is often an installment loan used to pay off credit card debt. Several loan types, including personal loans, home equity loans, and peer-to-peer loans, can be considered credit card consolidation loans when used in this way. You could also use another credit card to consolidate credit card debt via a balance transfer.

A credit card consolidation loan can replace existing monthly credit card accounts and payments with a single account and a single payment. When your loan has a lower interest rate than the debts you're consolidating, you can save money on interest and potentially pay off your debt faster.

Learn More: What Is Credit Card Consolidation?

Learn More: What Is Credit Card Refinancing?

How does credit card consolidation work?

Credit card consolidation via an installment loan (like a personal loan) simplifies your debt into a single monthly payment, typically with a fixed interest rate and repayment term.

After qualifying for a credit card consolidation loan, your lender funds the loan in a single lump sum — either by depositing it into your bank account or making direct payments to your creditors.

After paying off your credit card debt with the new loan, you're responsible for repaying it. Making on-time payments can help build your credit over time, while missing payments can hurt it.

Related: How Does Debt Consolidation Work?

Consolidate for a credit score boost

One major perk of consolidating credit card debt with a personal loan is the potential for an almost-instant boost to your credit score. Credit utilization — how much of your available credit you're using — contributes up to 30% to your FICO score. 

When you pay off credit card debt, you can reduce your credit utilization to zero (as long as you keep your cards open and don't carry a balance). Since most companies report monthly to the credit bureaus, you could see significant score improvements within one month.

Average credit card consolidation loan interest rates

The interest rate you qualify for depends on your credit score, among other factors. A higher credit score helps you qualify for a lower rate, while a lower score can lead to a higher rate.

Pros and cons of credit card consolidation loans

Credit card consolidation loans can simplify debt repayment and save you money, but they could have disadvantages, too.

Pros

• Lower interest rates: Credit card consolidation loans typically have lower APRs than credit cards. According to the Federal Reserve, the average rate on two-year personal loans is 12.33% compared to an average rate of 21.76% for credit cards.
• Fixed interest rates: Most credit cards have variable interest rates, but credit card consolidation loans often have fixed rates. Fixed interest rates mean consistent monthly payments.
• Simple interest: Credit cards often charge compound interest daily on your balance — this means that interest is added to your balance on which subsequent interest is charged. Most installment loans charge simple interest and amortize payments. Unlike credit cards, you won't pay interest on unpaid interest.
• Single monthly payment: Consolidating multiple credit cards into a single monthly payment reduces administrative hassle.
• Lower monthly payments: Getting a lower rate on your new loan may be the best way to reduce monthly payments. Opting for a long repayment period is another way (even if you can't get a lower rate). And since credit cards often charge compound interest, balances can add up quickly and result in larger monthly payments compared to a personal loan for the same amount.
• Shorter payoff period: With a lower interest rate on a credit card consolidation loan, you might be able to pay off your debt faster.
• Potential credit boost: Paying off credit card debt could reduce your credit utilization to 0%. This can result in quick score gains, especially if your credit utilization is high. In turn, repaying your debt consolidation loan can improve or maintain a positive payment history, which also adds to your score.

Cons

• Best rates reserved for great credit: Without good or excellent credit, it may be challenging to qualify for an interest rate that saves you money.
• Potential fees: There may be costs involved with taking out a loan, such as an origination fee, which you should weigh against the potential savings of debt consolidation.
• Temporary fix: Consolidating debt can make repayment easier, but it doesn't solve any underlying spending problems you may have or prevent you from racking up more debt in the future.

Credit card refinancing vs. debt consolidation

Credit card refinancing and debt consolidation are both strategies to help borrowers save money and potentially pay off debt faster. These terms are often used interchangeably.

Credit card refinancing refers to getting a lower interest rate or repayment term for one or more cards. For example, you could refinance a credit card by transferring your balance to a 0% APR balance-transfer card, lowering or eliminating interest during the card's promotional period. If you can pay off the balance before the interest rate increases, you may be able to save a significant amount of money. You can also refinance debt with a loan.

Debt consolidation can serve the same purpose, but involves paying off multiple credit cards or existing loans.

Matt Schwartz, Co-Founder at VA Loan Network, suggests considering how many credit cards you're dealing with: "Refinancing works well when you're dealing with a single large debt and can secure a lower interest rate, saving money over time. Consolidation, on the other hand, is great for managing multiple debts, combining them into one payment, and possibly lowering the overall interest rate. It really comes down to whether you're looking for simplicity or savings."

In many cases, you can consolidate and refinance credit card debt at the same time.

How to qualify for a credit card consolidation loan

1. Check your credit: Checking your credit gives you an idea of how likely you are to qualify for a debt consolidation loan. If your credit isn't great, take steps to improve it before applying for a consolidation loan. You can get free weekly copies of your credit report at AnnualCreditReport.com.
2. Add up your debt: If you don't already know how much credit card debt you have, check your current balances. This number will help determine the size of the loan you need.
3. Consult your budget: Assess your budget to figure out how much you can pay toward debt each month. Then compare prequalified loan rates and terms to find a monthly payment you can afford.
4. Compare lenders: Compare lenders based on eligibility requirements, APRs, fees, terms, and loan amounts. Pay special attention to origination fees as they'll reduce the loan amount available to send to creditors. Prequalifying with several lenders can provide rate estimates for comparison, but aren't loan offers or guarantees.
5. Apply for a loan: After choosing a lender, complete the application and provide any necessary documentation. This typically includes identification and proof of income, employment, and address.
6. Sign the loan agreement: After reviewing the loan agreement, sign it and await funding. Some lenders, like Discover, can make direct payments to your creditors, while others may deposit the funds into your bank account.

Related: What Are the Requirements for a Personal Loan?

Alternatives to consolidating credit card debt

Sometimes, debt consolidation isn't the best financial move. Depending on your situation, it may not save you money or be worth the effort. 

Other times, consolidation simply isn't practical for the size or extent of your debt. If any of these scenarios applies to you, consider the following alternatives:

• Debt avalanche: With the debt avalanche method, you pay off your accounts according to interest rate, from highest to lowest. This prioritization removes your most expensive debts first, saving you money and speeding debt payoff.
• Debt management plan: A debt management plan is a type of debt relief that involves working with a credit counselor. Instead of making monthly payments to a debt consolidation loan lender, you pay a credit counseling organization each month. This organization then pays your creditors and may negotiate lower interest rates to make debt payoff more manageable.
• Debt settlement: Debt settlement involves clearing your debt by negotiating a lower payment than what you actually owe — or paying a debt settlement service to do so. Debt settlement could make sense under extreme circumstances, especially if your credit is already severely damaged. However, using a debt settlement service involves fees, could hurt your credit further, and success isn't guaranteed.

Related: Debt Settlement Pros and Cons

Read More:

• How Debt Consolidation Helps Your Credit
• How To Get a Debt Consolidation Loan
• How To Negotiate Credit Card Debt
• 6 Ways To Consolidate Credit Card Debt
• 5 Ways To Pay Off $10K in Credit Card Debt
• 5 Debt Payoff Strategies for $30K in Credit Card Debt