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Morissa R. Freiberg Group

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Austin Hernandez
Austin Hernandez

Consolidate Credit Card



A balance transfer is a solution offered by your credit card. Using your available credit, a balance transfer lets you pay off other credit cards or loans. Those debts are then consolidated and added to your credit card balance.




consolidate credit card


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You must have a minimum individual or household income of $25,000 to be considered for a Discover personal loan. It cannot be used to pay for post-secondary education, to pay off a secured loan, or to directly pay off a Discover credit card.


Debt consolidation is taking multiple loans and refinancing them into one loan with a new lender. There are multiple ways to consolidate your loans. The most popular way is to take out a personal loan and use those proceeds to pay off your other debts, but some consumers prefer to use home equity loans or HELOCs.


Despite the potentially negative impacts of debt consolidation, this debt management approach can improve your credit score over the long term. Payment history is 35 percent of your credit score, so making on-time payments will increase your score. If you only have revolving credit like credit cards, adding a personal loan for debt consolidation can improve your credit mix and boost your score.


The most common reason to consolidate your debt is to save money on interest. If you can consolidate your debt and get a lower interest rate, you could save hundreds or even thousands of dollars in total interest.


Another popular reason to consolidate debt is to simplify your monthly payments. If you struggle to pay your bills on time because of different due dates, consolidating could make it easier to manage your finances.


The most efficient strategy to consolidate your debt starts with making a list of your current loans and credit cards. Include the total balance, interest rate, minimum monthly payment and total remaining payments.


Make sure to apply for these loans and credit cards within two weeks to avoid multiple hard inquiries on your credit report. Once you have all of your offers, you can compare them with this debt consolidation calculator to see which lender you should choose.


A debt consolidation loan is one option to pay down your debt. The best way to consolidate your debt without hurting your credit is to create a plan and stick to it. While your credit score may decrease temporarily, managing your debt and making on-time payments will help improve your score.


Though a debt consolidation loan is a great choice for some, you also have other options. Creating a debt management plan, taking advantage of a credit card balance transfer or overhauling your budget are other ways to consolidate your debt with minimal hurt to your credit.


Identifying the best way to consolidate credit card debt out of these three options depends on your financial situation. That includes how much you owe, your credit score, and how much money you have available for monthly payments.


Balance transfers are the best option for credit consolidation when you have excellent credit and a limited amount of debt. Balance transfer cards offer 0% APR for a limited time after you open the account. The higher your score, the longer the 0% APR period.


Using a loan to consolidate credit card balances is another DIY option you can use if you have good credit. You take out a loan at the lowest interest rate possible and use the funds you receive to pay off your credit cards. This leaves only the loan to repay.


This is often a good way to consolidate credit card debt if you want lower monthly payments, but only if you have good credit. Depending on the term you choose, you can significantly reduce how much you pay each month. But you still get out of debt faster than you would with traditional payments thanks to the low APR.


Then you consolidate the debt with a debt management program. The credit counseling team works with your creditors, who agree to reduce the interest rates applied to your balances. They also agree to accept reduced monthly payments.


Some people think home equity loans are a good way to consolidate credit card debt. However, this effectively converts unsecured debt into secured. Now, if you fall behind, you can be at risk of foreclosure.


The right way: Make sure you understand costs and fees before you consolidate. Compare options to find the lowest fees possible with the solution you want to use. For example, compare balance transfer fees on different cards before you apply.


In any case, be very careful with any new financing you take out while you repay consolidated credit card debt. Consolidation often makes it easier to qualify, because it fixes your credit utilization ratio and helps build a positive credit history. Those are the two biggest factors used to calculate your credit score.


In nearly 30 years, Consolidated Credit has helped consumers consolidate over $9.75 billion in credit card debt. In 2021 alone, we helped nearly 10,000 Americans consolidate almost $114 million in credit card debt.


As a nonprofit credit counseling organization, our certified credit counselors will only recommend a debt management program if it is the best debt solution to use in your situation. So, while we provided free credit counseling to over 172,000 people last year, only 9,859 went on to consolidate with us.


For others, some received recommendations to apply for credit consolidation loans or balance transfer cards. If a counselor sees that you should be able to consolidate successfully on your own, they can confirm that for you.


Editorial Disclaimer: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.


Navy Federal conducts all member business in English. All origination, servicing, collections and marketing materials are provided in English only. As a service to members, we will attempt to assist members who have limited English proficiency where possible. Military images used for representational purposes only; do not imply government endorsement. Terms and conditions are applied to gift cards.


There are lenders that offer special debt consolidation loans, however those type of loans often have much higher interest rates and if you have good credit, you could be better off with taking a personal loan to consolidate versus a special debt consolidation loan. This may also be a good option if you have your spending under control and are 100% sure that you will not use the personal loan for anything other than paying off your debt for consolidation.


In fact, consolidating credit card debt can ease your stress in two ways. First, you'll be making one payment a month instead of four or five. And second, you might get a much lower interest rate to pay off your debt, which will save you money.


If your credit score is still pretty good, a balance transfer credit card might work for you. You're going to need a very good to exceptional FICO score, which means you might need at least a 740 or so, to qualify for the best balance transfer cards. Lenders also use your credit report and information from your application to make a decision, so your supporting data could help you get approved.


Right now, the top balance transfer credit cards are offering 0% annual percentage rates with introductory periods from 12 to 21 months. If you do qualify, this is a golden opportunity to pay off your debt without paying interest. As long as your credit limit is high enough to cover the total amount you want to transfer, you're in business.


But you need to follow two ground rules to stay out of trouble. First, you must determine your monthly payment so you'll pay off your debt before the intro period ends. If your new card has a balance transfer fee, which can be up to 5%, you must include that fee in the total amount you need to pay back.


Here's an example: Let's say you're transferring a total of $10,000 onto a card with an 18-month intro period and a 3% transfer fee. You'll need to pay $572.22 every month to pay it off before the intro period ends ($10,300/18 = $572.22).


The second rule is that you can't use your balance transfer card for new purchases. Sometimes, your new balance transfer card will offer a 0% intro rate on purchases as well. Don't get seduced by that offer. You can use this card for new purchases when you're debt-free.


Even if your score isn't high enough to get a 0% introductory APR offer on a balance transfer card, you still might qualify for a balance transfer card that has a lower APR than what you have now on your credit cards.


I know many people are struggling with high prices right now. Inflation in June 2022 reached a new 40-year high of 9.1%. If you're in a position where you can start chipping away at your debt, consolidating multiple credit card balances into one installment payment per month can save you time and money.


You won't get a 0% APR like you would with a top balance transfer card, but you'll likely get a better rate than what you currently have on your credit cards. And best of all, you can get a fixed rate.


As with credit cards, loan companies look at more than just your score. For instance, debt consolidation loan companies look at your credit report, debt-to-income ratio, employment history and income.


Even if you don't have a good credit score, go ahead and do the research to see if you can find lower rates than what you currently have on your credit cards. That alone can help you save a lot of money.


Another option for credit card debt consolidation is peer-to-peer lending. P2P loans, also called social lending, aren't from traditional lenders, such as a bank. Each platform is a little different, but P2P marketplaces basically match borrowers with people who want to invest their money by giving you a loan.


What if you're in so much debt, you can't make monthly payments even if you consolidated your debt? You probably think you have to deal with this alone, but you can reach out for help from the National Foundation for Credit Counseling. It takes courage to ask for help, so don't consider it a weakness. 041b061a72


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