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Using credit cards to pay for things is convenient, but if you’ve run up a big balance on lots of cards, you may find yourself looking for the best way to consolidate debt.

What is credit card consolidation? Is a debt consolidation loan a good idea?

Having lots of credit cards can backfire if you don’t pay off your balance each month. Making a dent in what you owe can seem impossible when you’re stuck with high interest rates.

Consolidating your credit cards can help you shave big points off your rate. Here’s a look at three best ways to consolidate debt, combining your credit card balances so you can zap the debt faster.

How can you consolidate debt?

Transfer your balances

Credit card companies routinely promotional deals on balance transfers for new customers, with promotional interest rates as low as 0 percent. Cashing in on one of these offers is an easy way to consolidate your credit card debt, and save some money in the process.

The key to making a balance transfer work is paying the card off before the promotional period ends. Depending on the card, you might have anywhere from six to 18 months before the regular APR kicks in. Figuring out what you can afford to pay each month will give you an idea of how long a promotional period you need.

Another thing to keep in mind is the balance transfer fee. Credit card companies typically charge 2-3 percent for balance transfers, which is immediately tacked onto the new card’s balance. You’ll need to factor that in when you’re determining the best way to consolidate credit card debt.

Take out a personal loan

Balance transfers can be a real money saver, but only if you’re able to get the card paid off before the promotional rate expires. If you need a longer time frame for paying down your debt, a personal loan might be the best way to consolidate credit card debt.

With a personal loan, you’re still going to pay interest on what you borrow, but you may qualify for a rate that’s less than what you’re forking over to the credit card company. Your monthly payments may also be lower since they’ll be stretched out over a period of years versus months. Just remember that, all other things being equal, longer loan terms usually mean higher total interest payments.

Your bank is a good place to start if you’re looking for a personal loan, but be sure to shopping around and compare rates. You might be able to snag a better deal through a credit union or an online peer-to-peer lender.

Tap into your home equity

If you’ve built up a decent amount of equity in your home, you could leverage that to pay off your credit cards fast and once and for all. With a home equity loan or line of credit you can lock in a lower rate and give yourself a little more flexibility when it comes to the payments. If you feel secure in your job or have a steady stream of income, tapping into your home equity could be the best way to consolidate credit card debt.

But using your equity to pay off your credit cards is risky, because you’re putting your home on the line as collateral. If you can’t pay off the loan or line of credit, the bank could hit you with a foreclosure proceeding. You have to decide whether you’re comfortable taking that gamble before you commit to borrowing against your equity.

Put your cards in time out

Once you’ve found the best way to consolidate credit card debt, you don’t want to run the balances back up again. It’s a good idea to park the cards someplace safe so you won’t be tempted to use them. Just make sure you’re keeping the accounts open since closing them down permanently could hurt your credit score.

How do you get out of debt?

Dealing with debt is always hard, but borrowers in debt do have some options available to them, to help them deal with their debt.

Many borrowers refinance their loans in order to secure a lower interest rate, comparing what different lenders can offer to get the lowest possible rate. The easiest way to compare your options is with Credible, a multi-lender platform that delivers pre-qualified rates with one, two-minute application that doesn’t affect your credit.


Credible is a multi-lender marketplace where lenders including Avant, LendingClub, PAVE, Prosper and Upstart compete for your business. You can compare personalized offers from multiple lenders on without sharing your personal information with lenders or affecting your credit score. Rebecca Lake is a writer and blogger who specializes in all things finance. She likes writing about debt, credit, investing, retirement, taxes, college planning, insurance and real estate.