Best Credit Card Consolidation Loans

A credit card consolidation loan allows you to reduce multiple payments into a single one, while potentially reducing your interest charges. That’s because credit card consolidation loans are personal loans, and will have a lower interest rate than most credit cards. So when you have one of the best credit card consolidation loans, you can potentially save hundreds, or even thousands of dollars while you pay off your debt sooner. Our team of financial experts reviewed and ranked more than 30 online lenders to help you get funded.

Best Credit Card Consolidation Loans in 2024 - Full Overview

How to Choose The Best Credit Card Consolidation Loan

Once you’ve decided that a credit card consolidation loan is the best way for you to pay off your debt, how do you find the best one? Thankfully, our experts used numerous factors to rank the available lenders.

When you’re looking for the best credit card consolidation loan, here’s what you need to pay attention to:

• Loan Features: Look at the key features such as the loan terms, loan amounts and loan use limitations.
• Interest rates and fees: Be aware of all of the different types of fees, as minimum and maximum interest rates that may apply.
• Application process. Examine the application information requirements, and take a look at whether it requires a hard-pull or soft-pull of your credit report, and what the impact on your credit score will be. You also want to know what the funding time is and any distinctively competitive offerings.
• Qualification process. Find out what the loan’s minimum credit score is, as well as the income requirements. If applying with another person, learn if a co-signer or joint application is an option. And if applying to a credit union, you’ll want to know what the membership requirements are.
• Customer support. Do they offer live customer service representatives? What are the other ways they offer support?
• Online user reviews. Look for reviews on independent review sites like Trustpilot.
• Perks and Bonuses. Does the loan provider feature other service offerings like payment flexibility, advertising transparency and advanced technology.

What is a Credit Card Consolidation Loan?

A credit card consolidation loan is a personal loan that’s used to pay off the balance of existing credit cards. Once the balance is paid off, then you’ll only have a single loan to make payments on every month. And most importantly, a credit card consolidation loan should offer a lower interest rate than your credit card accounts.

Should You Consolidate Credit Card Debt?

When you can qualify for a credit card consolidation loan that offers a lower interest rate, then it can save you a lot of money. Other reasons to consolidate your credit card debt include having a lower monthly payment, or

However, there can be some alternatives to personal loans, such as balance transfer credit cards that offer 0% APR promotional financing. And if you are close to paying off your credit card balances, then you may not need to consolidate them.

Credit Card Refinancing vs. Debt Consolidation

If you are considering credit card refinancing instead of a debt consolidation personal loan, then it’s important to consider the differences as well as the benefits and drawbacks of each.

First, credit card refinancing means using a balance transfer credit card to consolidate your debt, while true debt consolidation means taking out a personal loan. Refinancing your debt with a credit card can offer an interest free promotional financing period, but it will eventually expire. And when it does, you’ll be back to incurring interest charges at the standard interest rate. You’ll also be bound by other credit card terms including the same minimum payment, late fees and potential penalty interest rate. And if you continue to use the credit card for daily purchases, you’ll add more to your balance and it will take longer to get out of debt.

But with a debt consolidation personal loan, you’ll pay off your credit card debt, and can enjoy a lower interest rate for the life of the loan. You’ll also have different terms and conditions that can be more favorable than a credit card.

How to Get a Credit Card Consolidation Loan

Getting a credit card consolidation loan can be a great way to pay off your debts, but there are several steps that you should follow to apply for one.

• Research your debts. First, make a list of your current debts, their interest rates and your monthly payments. This way, you’ll understand the total amount of debt that you need to consolidate, and what interest rate you will need to receive to justify the new loan.
• Check your credit. You can use one of many free services to check your credit scores. And if you notice any problems, you’ll want to check your credit reports as well. Thankfully, you are entitled to a free copy of your credit reports from AnnualCreditReport.com, which is the only source of free credit reports that’s authorized by Federal Law. If you find out that your credit score is either “Good” or “Excellent,” about a 700 or better FICO score, then you’re likely to qualify for a personal loan with an APR that’s lower than your credit cards. If your credit score is below 700, then it can be much harder to find a personal loan with a low interest rate.
• Shop around. Compare the terms and conditions of various loans. Finding the lowest interest rate is the most important thing for most borrowers, but you’ll want to consider the factors as well.
• Apply for the loan. This process involves gathering and submitting the necessary documents including those that verify your identity and your address, as well as verify your income. At the same time, you’ll want to closely examine your loan document’s terms including fees and prepayment penalties, if any.
• Close on the loan, and make payments. Once the loan is finalized, or closed, you’ll need to ensure that all of your other loans are paid off and have a zero balance. You’ll also want to set up a system to ensure that you make timely payments. Your lender might offer a way to make payments automatically, or you can set up recurring payments through your bank.

What to do After a Credit Card Debt Consolidation

Once you have successfully consolidated your credit card debt, what comes next? You’ll want to set up a personal finance system that allows you to manage your finances without getting back into credit card debt. Here are several strategies you could consider:

• Cancel your credit cards. After getting in and out of credit card debt, many people prefer to simply avoid credit cards. You may wish to close your accounts, but that could have negative effects on your credit.
• Keep the accounts open. You could also choose to keep the accounts with no annual fees open, but keep the cards in a secure place and use them rarely, if ever. However, you’ll need to make an occasional charge to ensure the accounts aren't closed for inactivity.
• Find an alternative method of payment. Without using credit cards, you’ll need to use something else to make purchases. Choices include bank debit cards, prepaid debit cards and cash. Each has its own advantages, drawbacks and costs that you’ll need to weigh.

Alternatives to Credit Card Consolidation Loans

While personal loans are popular, they aren’t the only way to consolidate credit card debt. Here are some other alternatives:

• Balance transfer credit cards. There are many credit cards that offer 0% APR or reduced APR balance transfers. These promotional financing offers last from a minimum of six months to as long as 21 months. After the promotional financing rate expires, the standard interest rate will apply.
• Home equity line of credit. If you own your own home, then you could qualify for a line of credit that’s secured by your equity. You can then use this line of credit to pay off your credit card debts. And as a secured loan, you should receive a very low interest rate compared to your credit cards.
• Home equity loan. Like a home equity line of credit, a home equity loan is an installment loan that uses the equity in your house as security. This loan is then used to pay off your outstanding credit card debts.
• Cash out refinancing. Another option is to refinance your house and take cash out. That’s when your new loan exceeds the remaining balance in your old loan, and the difference is returned to the borrower. Since mortgage loans tend to have very low interest rates, you should receive a much lower rate than your credit cards offer.
• Retirement savings loan. There are 401(k) plans that allow you to borrow from your retirement savings. These loans can be used to pay off credit card debt, and when they are repaid, your retirement savings is restored. There are numerous requirements and regulations that affect these kinds of loans, so you’ll want to do plenty of research before proceeding.

Conclusion

Finding the best credit card consolidation loan is not simple, but our guide can make it much easier than starting from scratch. And while your credit card debt can seem overwhelming right now, finding the right personal loan can reduce your many payments to a single, manageable bill. Most importantly, you should be able to enjoy a lower interest rate and pay far less in interest charges. And when you’ve paid off your credit card balances, you’ll have the opportunity to start over with your finances and manage them more efficiently and effectively.