What's the smartest way to consolidate credit card debt?

The smartest way to consolidate credit card debt depends on your particular finances, but the most ideal way is to open a balance transfer credit card that offers 0% intro APR for a year or two. If you don't think you can pay it off in that time frame, a personal loan with fixed monthly installments is the way to go.

Can I consolidate if I have bad credit?

If you have bad credit, you may only be able to consolidate your credit cards with a debt management plan.

Will I still be able to use my credit cards after consolidating?

You can still use your credit cards after consolidating if you're using a conventional method like a balance transfer credit card, a personal loan or a home equity loan. However, a debt management plan requires you to close all credit cards that you're consolidating.

What are the risks of debt consolidation?

The risk of debt consolidation is that you won't correct your spending habits and you will again max out your credit cards. If you don't trust yourself to spend responsibly, avoid debt consolidation.

Is credit card consolidation the same as settlement?

Credit card consolidation is not the same as settlement. Settlement involves your lenders agreeing to waive a portion of debt you owe them.

Is it possible to consolidate credit card debt without help?

It's possible to consolidate credit card debt without help from a credit counselor. You can open a balance transfer credit card or a personal loan yourself — as long as you've got a good enough credit score.

Can you really consolidate credit card debt without hurting your credit?

Yes, you can really consolidate credit card debt without hurting your credit. Your score may drop by a few points when opening a new loan or credit card, but it will quickly increase as long as you use your credit cards responsibly and avoid late payments on your loan.

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How To Consolidate Credit Card Debt

August 5, 2025

6 min Read

Written by Sarah Hostetler

Edited by Melanie Grafil

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Consolidating credit card debt is the act of combining multiple credit card balances into one. The result can be a single, more manageable monthly payment. The best debt consolidation loans often come with a lower interest rate.

How To Consolidate Credit Card Debt in 5 Steps

Consolidating your credit card debt is less complicated than you might think. Just follow these simple steps.

1. List All Your Credit Cards and Balances

It’s important to know exactly how much debt you’re dealing with. The total amount can affect your final decision for how to consolidate it. For example, if you’ve got $40,000 in balances, you probably won’t be able to throw that on a balance transfer credit card.

2. Check Your Credit Score

Your list of options is largely dictated by your credit score. For instance, you likely won’t qualify for an installment loan if you’ve got a sub-600 credit score.

Similarly, a balance transfer credit card will only hold as much as its credit line will allow. If your credit score is bad, you probably won’t be able to transfer a meaningful amount of debt to it.

3. Choose the Right Consolidation Method

You’re looking for the plan that will help you pay off your debts the fastest with minimal negative impact to your credit score.

Again, balance transfer credit cards, personal loans and home equity loans will all likely cause short-term dips but quickly improve your score.

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A debt management plan can have the most negative impact on your credit, but it’s nice to have the option when if you’ve run out of other alternatives.

4. Apply and Move Your Debt

Open your new account and relocate your debt. For balance transfer cards, this will mean sharing with the issuer your debt-filled credit card numbers. For personal and home equity loans, you’ll often receive a lump sum of money that you can use to zero out your credit cards.

5. Stick to Your New Payment Plan

Use your current credit responsibly and make the minimum payments for your new loan on-time. Your credit score will improve.

What Are the Best Ways To Consolidate Credit Card Debt?

There are multiple ways to consolidate your credit card balances. Here’s a rundown for how to consolidate credit card debt without hurting your credit.

Loan Type	Best For	Interest	Ease of Use	Credit Impact
Balance transfer credit cards	Those with good credit scores	0% intro APR for up to 24 months, then typically variable rates up to 29%	– Quick online application – Balances may take a few weeks to transfer – Pay off at your leisure, though minimum payments are still required	Credit score will temporarily drop slightly from opening a new card, but quickly bounce back.
Personal loans	Those who want fixed monthly payments with a definite payoff date	Generally between 6% and 27% APR, depending on your credit score and other factors	– Quick online application – Cash often deposited within a few days – Straightforward monthly installments	Credit score will temporarily drop slightly from opening a new account, but can shoot up from a reduced credit utilization.
Home equity loans	Homeowners with equity willing to use their house as collateral	Generally between 6% and 24% APR	May require more than an application, including appraisal and closing costs	Credit score will temporarily drop slightly from opening a new account, but can shoot up from a reduced credit utilization.
Debt management plan (DMP)	Those with bad credit who don’t foresee a way to pay down debts	Potentially reduced from your current credit card APR	– Requires credit counseling – New loan arranged by a credit counseling agency – Accounts being rolled into the DMP must be closed	Credit utilization will likely spike as your credit card accounts are closed.

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Pros and Cons of Consolidating Credit Card Debt

If you’re considering credit card debt consolidation, the best way to consolidate credit card debt varies depending on your situation. Here are the pros and cons of debt consolidation.

Pros:

Easier to manage your monthly payments
Reduced interest rates
Potential credit score improvement

Cons:

Upfront fees — sometimes
May not work for poor credit
Enables you to accrue more debt if spending isn’t controlled

Should You Close Your Credit Card Accounts After Consolidating?

If an open credit card tempts you into overspending, it’s best to keep your credit card accounts open after consolidating. There are multiple reasons for this, including:

Keeping a low credit utilization: The ratio of your total available credit to the amount you owe is a huge factor in your credit score. Close your credit cards, and your total available credit goes down.
Maintain a lengthy credit history: When you close longstanding credit cards, your average account age will decrease, which can hurt your credit score.
More opportunities to exhibit good credit habits: The more credit cards you have, the more on-time monthly payments you can make. Of course, you shouldn’t rack up more debt on your credit cards, but using them all periodically can help bolster your credit profile.

Infographic highlighting 4 key signs that indicate when consolidating credit card debt might be the right choice.

Is Credit Card Consolidation the Right Move for You?

Depending on your financial situation, some of these strategies work and some won’t. Here’s how to tell:

When Consolidation Works Best

You’re struggling with high-interest debt.
You have a decent credit score, so you can qualify for good interest rates.
You have a steady income and can pay back your loan on time.

When To Avoid Consolidation

Your credit score is too low and you have a hard time opening a new account.
You don’t have stable income right now — it may still be aa struggle to pay back a consolidated loan.
You’re missing or behind on payments and can’t afford bills. A debt management plan may likely be a better option.

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What’s the Next Step? Taking Charge of Your Debt

You shouldn’t get a debt consolidation loan if you’re unwilling to change your previous spending habits.

Remember, this is your chance to repair your credit and eliminate debt. If you overspend again, you’ll find yourself making monthly payments on your new loan and high-interest credit cards.

Ana Gotter contributed to the reporting for this article.

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