Consolidating credit card debt in one place can be an effective way to simplify your finances and your life. Some common ways to do this are through balance transfers; borrowing money through a personal or home equity loan; or working with a credit counselor. 

Credit card debt consolidation gives you the chance to better organize your bills, because you’re not juggling multiple monthly payments.

However, before making the decision to consolidate it’s important to consider these five points:

1. Balance Transfers Can Impact Your Credit

A balance transfer is one frequently used way to consolidate debt – moving debt from one credit card to another so you can take advantage of a reduced or 0 percent APR introductory offer. Consolidating credit cards and leveraging low balance transfer offers has the potential to save you money on interest.

But to accomplish this, it’s important to follow a few pointers. For example, generally 30 percent of the

2. Check to See if a 0 Percent APR Applies Only to Balance Transfers

In some cases an introductory APR of 0 percent might only apply to balance transfers. As a result, new purchases could be charged the standard APR – which can be very high. Your cardholder agreement will state the APR for purchases and whether any intro rate applies.

If your monthly spending continues to add to your debt, this could take away some of the advantages of the balance transfer.

You’ll still need to do the hard work of sticking to a budget, prioritize spending and possibly make some lifestyle changes. All things that are easier said than done.

Consider researching some budgeting tips to for help with tracking your spending and income.

3. Watch Out for Transfer Fees

While a 0 percent intro APR is a great way to pay off credit card debt faster, and save on interest payments, it’s not free. Balance transfer fees are sometimes charged, with fees from 2 to 5 percent of each balance transferred.

Typically, despite the upfront costs, you’ll still enjoy substantial savings in the long-term. However, it’s something to consider when deciding if credit card consolidation is right for you.

4. Before You Consolidate, Take Stock of Your Debt

To determine if credit card consolidation is right for you, it’s important to answer a few simple questions:

  • How much debt do you have? Gather all credit card statements, and add up how much debt you owe to your creditors.
  • How much can you realistically put toward paying the credit card monthly? The goal is to pay off debt quickly, so tally up how much you can afford to allocate monthly.
  • How long is the introductory low-APR window? A longer APR duration gives you more time to pay off debt before the rate reverts to the standard, and usually much higher, APR.

With these three factors in mind, figure out how much you can save on interest during the 0 percent APR window compared to your existing rates. Then, calculate how much you’ll pay in interest at the standard purchase rate on a new card over the time you think it will take to pay off the remainder of the balance. Compare these numbers to what you would pay in interest at your current rate(s).

5. A Credit Counselor Can Help, But Do Your Research

If you’re considering getting outside help tackling your debt, be sure to thoroughly evaluate credit counselors before choosing one. “Non-profit” doesn’t guarantee that services are free or legitimate. Some non-profit credit counseling organizations may charge very high fees. According to the Federal Trade Commission, a reputable credit counseling organization should:

  • Send free information about their services, without requiring you to share any specific details about your situation
  • Licensed to offer services in your state
  • Offer a range of services, from budget counseling to savings and debt management classes
  • Accredited and certified counselors

Research credit counseling agencies with your state attorney general and local consumer protection agency. These agencies will help you uncover if the company has any complaints against them.

Other Options for Credit Card Consolidation

Another popular option for consolidating credit card debt is a personal loan. This involves consolidating your debt into a loan, and then paying it off at a fixed rate over a specific period time, such as five years. These loans are unsecured, meaning you don’t put up any collateral.

A home equity loan – a loan against the value of your house – can also be used for debt consolidation.

Where to Consolidate Credit Card Debt

Your local bank or credit union should be able to help you with your credit card consolidation. There are also a number of online options.

Discover offers credit card debt consolidation through balance transfer, personal loans and home equity loans.   

Just remember that your spending habits and discipline in making payments will play a big role in paying down debt, regardless of the method you choose. 


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Originally published February 13, 2015

Updated May 29, 2019

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