How to consolidate credit card debt

July 8, 2025|7 min read

Managing debt can be stressful, particularly if you fall behind on bills and are watching interest charges build up. If you feel overwhelmed by high-interest debt, consolidating your credit card debt could be one way to simplify and lower your payments.

Keep reading to learn a few methods to consolidate credit card debt, including some considerations for each.

What you’ll learn:

Credit card debt consolidation might allow you to combine multiple debts into a single payment with a lower interest rate.
Common ways to consolidate credit card debt include credit card balance transfers, personal loans, retirement plan loans, debt management plans, home equity loans (HELs) and home equity lines of credit (HELOCs).
While credit card debt consolidation may be a helpful debt management option for some, it isn’t right for everyone.
Credit card consolidation might be effective if it provides a lower interest rate or more affordable monthly payments for you—and if you’re able to work toward paying off the debt and avoid late payments.

1. Debt management plans

When you need help consolidating credit card debt, you could consider setting up a debt management plan through credit counseling. Credit counselors are trained to understand credit card debt and teach people how to manage it.

The Consumer Financial Protection Bureau (CFPB) recommends finding credit counselors through the National Foundation for Credit Counseling (NFCC) and the Financial Counseling Association of America (FCAA). The CFPB also has a list of questions to help you find the right counselor.

Pros and cons of debt management plans

Pros	Cons
Could get advice from an expert Could have less impact on credit scores than alternatives like bankruptcy Debt repayment simplified with a single, potentially lower payment	You may be required to close your credit cards No guarantee your credit card issuers will agree to a debt management plan Could impact ability to get new credit

2. Balance transfer credit cards

A balance transfer credit card can be used to consolidate multiple balances into one credit card account. Part or all of your debt from other cards is moved to the balance transfer card, and you then make monthly payments toward the new card going forward. But you can’t usually transfer balances from the same credit card issuer.If you’re interested in this option, it’s worth considering how long the introductory interest rate applies to transferred balances—and whether the rate will apply to new charges you make. If the rate after the introductory period is higher than what you’re paying now, you’ll want to prioritize repaying the balance you transferred to avoid paying that higher interest rate.

Also keep in mind that some credit card issuers may charge a balance transfer fee that’s added to your transferred balance, which could increase what you owe in the long run.

Pros and cons of balance transfer credit cards

Pros	Cons
Low or 0% introductory annual percentage rates (APRs) APR after the introductory phase may still be lower than your current card Lower interest as long as the debt is paid off before the end of the introductory period	Potential balance transfer fee Typically, only those with good or excellent credit are eligible APR will increase after the promotional period ends

3. Personal loans

You could also use a personal loan to pay off credit card debt. If you’re approved for a personal loan, the money you previously used for monthly credit card payments would then go to paying off the personal loan.

Personal loans are typically unsecured loans, meaning they don’t require collateral for approval. But there may be other factors that determine whether you’re qualified. Keep in mind that if the rates you’re qualified for are higher than what you’re paying on your credit cards, consolidating your debt may not be the best option.

Pros and cons of personal loans

Pros	Cons
An installment loan could mean a more predictable monthly payment Lower interest rates for borrowers with good credit	Can be difficult to qualify for if you have bad credit Potential origination fee

4. Retirement plan loans

With a retirement plan loan, you’re borrowing from your savings instead of from a lender to pay off credit card debt. Not every type of plan allows it, but it might be an option with the following types of retirement plans:

There are several things to consider about retirement plan loans before you apply. If you fail to repay your loan on schedule and it goes into default, you may owe early withdrawal taxes and a 10% early withdrawal penalty. The same holds true if you leave your job or file for bankruptcy. You’ll still have to pay the loan back in full and, if you can’t, you may owe early withdrawal taxes and penalties.

Pros and cons of retirement plan loans

Pros	Cons
Low interest rates No credit check required, so your credit scores aren’t affected	Significant fees if you don’t repay on time You may have to repay the loan in full if you leave your employer

5. Home equity loans

A home equity loan (HEL) allows you to borrow money to pay off credit card debt using your home as collateral. The amount you borrow is determined in part by how much equity you have in your home. You can estimate this number by subtracting how much you owe on your mortgage from the property’s current market value.

HELs usually have a fixed rate, which means the rate won’t change over time. But it’s worth confirming before accepting a loan. If you’re considering a HEL, it also helps to examine whether additional fees and costs could make it more expensive than your original debt. And if you can’t make your loan payments, it could put your home at risk.

Pros and cons of HELs

Pros	Cons
Low interest rates Fixed rate means predictable payments	Closing costs could be expensive If you can’t repay the HEL, you could lose your home

6. Home equity lines of credit

Home equity lines of credit (HELOCs) are another way to borrow money from your home’s equity to pay off credit card debt. Unlike HELs, HELOCs usually have variable interest rates, which means payments could change from month to month. And unlike a lump-sum loan, HELOCs usually function like a credit card. But this type of loan can vary widely. Specifics like when and how you can borrow money and the repayment terms can be unique to your loan.Like HELs, HELOCs could put your home at risk if you are unable to pay. It’s wise to carefully examine and understand the details of each method before accepting one.

Pros and cons of HELOCs

Pros	Cons
Low interest rates Typically, no closing costs or low closing costs You can withdraw funds as needed, which means you’re only charged interest on the money you use	Unpredictable payments might mean more payments Potential for various fees Your home might be at risk if you’re unable to pay

Consolidating credit card debt FAQ

Here are some frequently asked questions about credit card debt consolidation.

Should you consolidate credit card debt?

Consolidating your credit card debt could be helpful if you’re currently struggling to pay off multiple credit card balances. But it’s important to understand that consolidating credit card debt isn’t a guaranteed fix and may not be the best option for everyone.

For credit card consolidation to be effective, you need to be willing and able to pay off the debt. And it may seem obvious, but you should only choose a debt consolidation plan that will help you save money. If you’re able to find a solution that offers a lower interest rate or affordable monthly payments, it might be a good option.

What are the benefits of consolidating credit card debt?

There are a couple of notable benefits to consolidating debt. First, you may be able to lower your payments by consolidating with a loan or a credit card that has a lower interest rate than your current accounts. Credit card debt consolidation could also simplify the payment process. By grouping your balances together, it might be easier to make one payment each month and track your progress as you pay down your debt.

What is the best way to consolidate credit card debt?

The best way to consolidate your credit card debt will depend on your personal financial situation. Factors that could affect the consolidation method you choose include your total amount of debt and which types of loans and terms you qualify for.

Does consolidating credit card debt affect your credit scores?

Credit card debt consolidation affects everyone differently. It’s possible that your credit scores could decrease slightly at first. But in the long run, consolidation could benefit your credit as you work toward paying off your debt. Lowering your overall debt could decrease your credit utilization ratio, which could improve your scores with consistent on-time payments.

If you want to see where your credit stands, you can get free copies of your credit reports from AnnualCreditReport.com. CreditWise from Capital One could also help—and it’s free to everyone. It has a tool called the Credit Simulator that lets you explore the potential impact of your financial decisions before you make them. That includes things like taking out a personal loan or opening a new credit card to transfer balances.

Key takeaways: Credit card debt consolidation

If paying your credit card bills is a struggle, consolidating credit card debt may offer a way to help you get back on track. There are numerous credit card debt consolidation options.

If you decide that consolidating credit card debt is the right move for your situation, a balance transfer may be a great place to start. Capital One offers several cards with low introductory rates. You can also monitor your credit score with CreditWise. It won’t hurt your credit, and it’s free for everyone.

Footnotes

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