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Credit Card Consolidation: Best Loan Companies for Debt & Bad Credit

Carl Andrews

Financial Advisor
Updated: 7/2019

Credit Card Consolidation

Credit card debt is one of the most common forms of debt in the United States. Using credit cards is one of the nation’s primary spending mechanisms – consumers enjoy how easy it is to obtain and use credit cards. Credit card providers want their clients to carry balances on their credit cards because it means they generate more money via interest. After the financial crisis in 2007, families in American began to take on more credit card debt to help make ends meet. This meant that many lenders ended up in a bit of hot water.

In This Article

Background

The reality is that credit card debt comes at a high cost – credit cards carry some of the highest interest rates on the market. If you’re looking to borrow a set amount of money, term loans tend to have much lower rates. Because you only have to pay a minimum payment on your credit card, you never have to pay it off by a certain date – this allows many people to fall into a trap of never paying their credit cards off. Instead, they simply continue to pay the interest off and lose money.

But if you’re serious about how to get rid of credit card debt, you have a few options available. Credit card consolidation is one of the best ways to start the debt removal process. You’ll want to be certain that you’re prepared to do what it takes to eliminate your credit card debt.

In this portion of our website, we’re going to take a look at credit card consolidation and how it can improve your financial status. We’ll also take a look at how to choose the best debt consolidation companies to work with, and how to increase your chances of being approved for credit card consolidation. As with any financial decision, it’s important that you’re well-informed of the risks and rewards – make sure to take in all the information provided in this article!

What is Credit Card Consolidation?

Credit card consolidation can mean a number of different things, but the general idea is that you’re consolidating all of your credit card debt into a single debt burden. If you have multiple credit cards with different providers, you have multiple interest rates and due dates. This can make things complicated if you’re trying to manage multiple payments and interest rates. With credit card consolidation, you can eliminate this complication and sometimes save some money. Below we will explore the two main forms of credit card consolidation in more detail.

Consolidation

This is the simplest form of consolidation. With this form of consolidation, you’re simply moving all your credit card debt onto a single card or payment. This means that you don’t have to worry about making multiple payments or potentially missing some payments. If you want to make your life easier, this is often a good option. This form of consolidation typically doesn’t save you money, just time.

Consolidate and Refinance

This is the most popular form of consolidation — when people refer to credit card consolidations they are also typically referring to refinancing. In this case, you pay off your current credit card debt with another form of finance, and then refinance it at a lower rate. This means that you won’t accumulate as much interest on your debt anymore – you will be able to pay it off much faster. It also means you will only have to pay a single payment, rather than a range of different payments. We’ll explore ways that you can consolidate credit card debt in further detail at another point in this article.

 

How to Consolidate Credit Card Debt

So, what’s the best way to consolidate credit card debt? There are actually a number of ways that you can consolidate your credit card debt. The option you choose will depend on the type of consolidation you’re looking for. Below we will explore the top three ways to consolidate your credit card debt.

Credit Card Consolidation Loan

This is the most common form of credit card consolidation. This allows you to refinance your debt at a much lower rate and pay your debt off. You will then have a single payment to pay each month. You will use the money you get from your loan to pay off all your balances, and then pay off the loan you have been issued with. In addition, because you are now using a term loan, you will have a set date that your debt will be paid off. It can be much easier to pay down your debt if you have a structured debt payment schedule. You can save thousands of dollars by using this form of debt consolidation.

If you’re carrying large credit card balances at high interest rates, we highly suggest you consider this form of consolidation. It has helped tens of thousands of people escape debt.

Consolidation Credit Cards

Another way people consolidate debt is through balance transfers – you can use a balance transfer to get a consolidated credit card. You can often balance transfer to a new credit card and take advantage of lower interest rates or interest-free periods. This can also be an effective way of consolidating your debt. The one thing you need to be careful about is continuing to spend on your new credit card. Because it’s not a term loan, you can accumulate more debt on your new credit card and end up back where you started!

Ask Lender

If you have multiple credit cards with the same lender, you might be able to consolidate them to a single card. This typically will not save you any money, as your interest rate will stay the same. But it will mean you only have to make one payment every month and reduce the hassle of making multiple payments.

Is It Smart to Consolidate Credit Card Debt?

You may be wondering: Is it good to consolidate credit card debt? The answer will depend on your particular debt situation. For the most part, credit card consolidation is extremely beneficial for the person who undertakes it. It can help you regain control of your financial future – paying off debt quicker will allow you to progress forward.

As mentioned previously, revolving credit often traps people in a debt cycle because they can continue to spend on their credit cards after they’ve paid them off. By obtaining a credit card consolidation loan, you’ll be able to ensure that you don’t fall into this debt cycle. You will have a set term time to pay off the loan. This is mentally beneficial for you as you know when you will become debt free.

 

Will Credit Card Consolidation Hurt My Credit?

Many people who are considering credit card consolidation begin to worry that it may impact your credit. The reality is that any loan application can damage your credit slightly – each time you apply for credit, it is recorded on your credit report. That’s why it’s important to take all credit applications extremely seriously.

While you may see your credit score decrease a few points when you initially consolidate your credit cards, the long-term impact will be huge. As mentioned previously, you won’t have to worry about high credit card balances and you can build your payment history. If you want to build your credit for the future, credit card consolidation can be one of the best ways to do so.

 

Best Credit Card Debt Consolidation Companies

If you do decide to consolidate your credit card debt using a loan, it’s important to choose the right company to work with. You don’t want to end up with a bigger problem than you had before. Because those looking for credit card consolidation are often quite desperate, there are plenty of predators operating in the space. You need to be careful to make sure you work with a company that has your best interests at heart.

In reality, a credit card consolidation loan is simply a personal loan that is provided to you with the intention that you use it to consolidate your debt. For this reason, most major lenders provide these types of loans to their clients. There are plenty of traditional lenders and online lenders that have the ability to provide you with a consolidation loan. This section will explore what to look for when you want work with the best credit card consolidation company.

What to Look For

Reputation

The top thing to look for when deciding on a credit card consolidation company is the reputation of the company that you’re working with. If you work with a company that has a bad reputation, you’ll find that your experience may mean the entire process wasn’t worth it. Head to Consumer Affairs or the Better Business Bureau. They both have websites that provide consumer information on companies throughout the United States.

Here you will be able to view past reviews of previous clients and other consumer information – such as filed complaints and legal battles. This will give you a better idea of what type of service the company provides its clients. If past clients have had a good experience, chances are you will as well!

Interest Rates

Interest rates are the next most important component of finding the best credit card consolidation company. You want to make sure that the loan you’re being offered has a much lower rate than your current credit cards, otherwise it won’t be worth it. You should compare your current interest rate to your new interest rate to make sure that the process will be worth the trouble. If you’re looking to save money, you should be looking for a good lender with excellent interest rates.

You should also try and assess if your new loan has a fixed or variable rate. A variable rate may mean that your interest rate climbs in the future. This can be problematic if it exceeds what your current credit card interest rate is. Make sure to factor this into any decisions.

Speed

You also want to look for a lender that has the ability to help you consolidate your debt quickly. You don’t want to continue accumulating interest payments because your lender takes ages to make decisions. You also don’t want to wait weeks for your money after you’ve been approved. If you want a quick decision and quick cash, online lenders tend to be the fastest option. They provide instant decisions in many cases, and some can get you cash within 24 hours of approval.

Preparing for Consolidation

If you decide to use a credit card consolidation loan to begin eliminating your debt, it’s important that you prepare yourself as much as possible for the application. When you apply for a debt consolidation loan or balance transfer card, the lender will be looking at your credit score to determine your eligibility.

If you want to get the best interest rate possible for your new consolidation loan, it’s important that you have the best credit score possible when you apply. Some lenders will have higher requirements than others, so make sure to check if you’re eligible for their financing before applying. Below are four steps you should take to ensure that you’re prepared for your application.

Pay Down Current Debt (As Much as Possible)

One of the biggest contributing factors to your credit score is the amount of debt that you’re currently carrying on your revolving credit accounts – credit cards or lines of credit. We understand you may not have money to pay down your current balances, but if you do, you definitely should. This is the quickest way to improve your credit score substantially – you may see up to a 100-point increase in as little as a few weeks. Many credit specialists also believe you’re better off spreading your debt burden over multiple cards, instead of having one ‘maxed out’.

Check Credit Report for Problems

Another way to improve your application is to make sure that you check your credit report for problems. Millions of Americans have misreported items on their credit reports. Often, people only check their score when they want to assess their credit. It’s important to also check your full report to see if every item on the report is yours. You can request false items be removed by the reporting bodies. You’re entitled to one free credit report from each of the major reporting bodies per year – take advantage of it!

Consider Using a Credit Repair Service

Once you’ve checked your credit report, you should assess if a credit repair service may be able to help you. If there are mistakes, you can get them removed yourself, but this can be hard if you don’t have the strength of a large company behind you. You want to be certain that you have the ability to get the results you need. In addition, credit repair companies are notoriously good at having inquiries removed from your accounts.

If you do decide to work with a credit repair company, make sure to use one that only charges for results. You shouldn’t be paying upfront for any credit repair!

Check Requirements

As mentioned previously, it’s important to check the lender requirements before you apply for any debt consolidation loan or balance transfer card. You want to make sure you have a realistic chance of obtaining the loan you want – there’s no point applying for a loan you can’t get. Being rejected by a lender will impact your credit score negatively.

Most lenders will have their lending requirements posted online, you can typically find them near the application portal. But if lenders aren’t advertising their requirements, you still need to make a good effort to find them. Head to credit forums and see if people have posted about your lender and what score they are accepted with – it can help you get a rough estimate of if you’re eligible.

 

Other Tips and Tricks

There are a few other things you should remember if you do decide to proceed with credit card consolidation. We’ve created this section of our page to help provide you with a few other tips and tricks for the consolidation process. It’s important that you’re aware of everything that can make your entire process a more pleasant and successful experience. Check out our suggestions below!

Commit to Changing Habits

If you do decide to consolidate your credit card debt, it’s important that you commit to changing the bad habits that got you into hot water in the first place. You don’t want to pay off your current credit card debt and then enter a whole new problem once you’ve escaped. Commit to making all your consolidation loan payments on time and ensure that you don’t accumulate any further debt afterwards. Make sure that you pay your credit card balance in total every month after you’ve paid it all off. Don’t fall into the same trap again.

Ask for Full Cost of Loan

If you decide to use a consolidation loan to pay off credit card debt, then you’ll want to have a full understanding of what you’re responsible for paying. Often, people make the mistake of assuming there are no hidden fees or charges associated with their loan. Lenders are notorious for including hidden fees. The best way to avoid a nasty surprise is to ask for a full cost of the loan prior to making any decisions. This way you know the exact cost of your financing – interest rates can be misleading if they don’t factor in fees or charges.

Don’t Rush

As with any financial decision, it’s important not to rush if you want to find the best credit card consolidation loan. You should make sure to assess all your different options and speak to your lender about any alternatives they may have. You don’t want to enter into a new financial agreement that you can’t afford – do the necessary due diligence.

 

Credit Card Consolidation Calculators

If you do decide to get a credit card consolidation loan, a credit card consolidation calculator is often a good option that can help you assess the type of benefit that you’ll receive. If you want to make sure that you’re getting a solid deal, you can use a debt consolidation calculator to get a rough estimate of how much you could save. Many calculators will allow you to input debt amount, interest rate, fees, charges, and other important information. You’ll want to make sure that you use a calculator that includes as many components as possible. Try a few to get a better idea of the real value of the loan.

Many lenders will have calculators on their website that you can use to get a rough estimate before you apply for any financing. You can also find these calculators posted on certain calculator websites. If you’re trying to calculate how long it will be to pay off your debt then a general debt calculator is what you’re looking for.

 

Verdict

After reading this page, you should probably have a pretty good idea if credit card consolidation is the perfect solution for you. If you’re carrying large balances on multiple credit cards, and you’re struggling to pay them off, chances are that credit card consolidation is the perfect solution for you. We advise that our readers take in all the information we’ve provided in this article – it’s important to know everything you can about the process.

The road to debt elimination is never short, but it can be much quicker if you use a consolidation service. The reduced stress in your life is just one of the many benefits of using credit card consolidation to escape high interest rates. If you want to be prepared to advance financially in your life, you need to be certain that you eliminate your debt. Taking advantage of investment opportunities is impossible if you’re carrying a lot of credit card debt.

Start the process sooner rather than later – it’s important to start the process so you have time to make the right decision. Ideally, you’ll be able to sort your credit card consolidation loan out before your next payment date, this way you don’t end up accumulating any interest. Join the thousands of people who have alleviated their debt problem via credit card consolidation!

FAQ

Getting Started on Credit Card Consolidation

Are you new to credit card consolidation? This section provides a list of commonly asked questions by consumers who are getting started on credit card consolidation.

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What is credit card consolidation?

Credit card consolidation is the process of taking out a new loan to pay off your existing credit card debts. All of these loans will be rolled into one, which should make payments easier and will give you a new payment term.

Should I consolidate my credit card debt?

It depends on the amount of debt that you have to pay. Remember, you are taking out a new loan. it will help to simplify the payment process so you can make on-time payments for a single loan. It is no guarantee that you can erase debt.

How to consolidate credit card debt on your own?

To consolidate credit card on your own, you must perform an extensive review of your finances and expenses. Commit to avoiding unnecessary expenses and identify your total credit card debt. Any savings you make must be paid towards your credit card debt until you can fully pay them. You can also shop for a balance transfer credit card with a lower interest rate and pay it off within the offer period.

Does debt consolidation close credit cards?

Yes, especially if your credit situation is bleak. But if you have good credit, there probably won’t be a need to close your existing credit card accounts.

What is the best way to consolidate credit card debt?

Always strive to pay more than the minimum payment requirement (if possible) so you can keep your balances low. With low balance, you will pay less interest. You should also never miss any payment schedule.

Is it smart to consolidate credit card debt?

If you find your existing debts difficult to manage to a point you miss payments, then consolidating credit card debt is a smart idea.

Should I consolidate credit card debt with a personal loan?

You should only consolidate your credit card debt using personal loan if you can commit to your payment schedule. Otherwise, it could end up hurting your credit.

Why consolidate credit card debt?

If you want to ease the burden of managing multiple payments for several loans or debts, consolidating is a good idea.

Is credit card consolidation bad?

No, unless you fail to commit to making your monthly payments. When this happens, you could hurt your credit score significantly.

Can you consolidate credit card debt with student loans?

You can but you won’t be able to use the new loan to pay off your other debts aside from your existing college debts. Plus, the downside is that student loans have higher interest rates than most personal loans.

How to get a loan to consolidate credit card debt?

Your lender will issue a personal loan that must be used to pay off your current debts. You can start applying for this loan by searching for various lenders that you qualify for. You have to commit to paying the fixed, monthly installments over an agreed time period.

When should you consolidate credit card debt?

If you have constantly missed your debt payments, it is time to consider debt consolidation.

Can you consolidate credit card debt into mortgage?

If possible, this should be avoided. Credit card debt is an unsecured debt. But if you tie your credit card debt into your mortgage, you deal with the risk of losing your home (when unable to make payments).

What's the difference between credit card refinancing and debt consolidation?

Credit card refinancing is moving your existing credit card debt into a new account with better pricing structure. On the other hand, credit card debt consolidation is moving multiple credit card accounts into one for easier payments.

Can I consolidate my car loan and credit card?

Consolidating your car loan with credit card is risky. Just like your mortgage, you run the risk of having your car repossessed if you are unable to meet the monthly payments for the consolidated loan.

What is a credit card consolidation loan?

Credit card consolidation loan is a type of loan that is designed primarily to pay off debts from credit cards. It is intended to combine your existing debts into one with a new and re-structured payment scheme.

How to consolidate high interest credit cards?

Search for a new credit card with lower interest rate or APR. You can transfer your balances from other credit cards with higher interest rate into the new account so you can lower your interest rate payments. However, the amount you can consolidate to the new card will be limited by the available credit.

Does credit card debt consolidation really work?

It is up to you. Being committed to making your payments for debt consolidation is the key to success for this method.

How do credit card consolidation companies work?

Credit card consolidation companies offer loans for individuals with significant credit card debt. The funds provided are used to pay off multiple debts so you can focus on paying this single, new loan.

Can I use my credit card after debt consolidation?

Ideally, you need to stop using your credit card debt after consolidating. You may use it for genuine emergencies only. Make sure you pay off your used credit within 90 days.

What are the disadvantages of credit card consolidation?

The disadvantage to credit card consolidation is that your loan is not reduced or forgiven. You still have to meet your monthly payments.

How to consolidate credit cards with tax return?

You can use your tax return to consolidate credit card debt. However, lenders or credit card companies cannot garnish your tax return to pay off your debts.

How to use 0 APR credit cards to consolidate debt?

Zero-interest debt consolidation is one of the best methods to consolidate your credit card debts. Look for credit cards with 0% APR introductory rate and make sure to pay off your debts within the introductory period so you can avoid paying interest rates.

Should I use upgrade to consolidate credit cards?

Upgrade can provide personal loans for up to $50,000 to consolidate debts. You can consider them as one of your options when consolidating debts.

Is it best to consolidate or bankruptcy on credit cards?

Debt consolidation loan might appear on your credit report, but if you diligently pay off your debt, it will significantly boost your credit score. On the other hand, bankruptcy can hurt your credit score and it will stay on your credit report for years.

How much can credit card consolidation save you each month?

It depends on the method of consolidating loans that you have chosen and where you choose to get a loan from (for consolidating debts). It is best to do comparison shopping of various debt consolidation companies to find the lowest interest.

Does consolidating your credit card affect your 401 k?

No. Unless you tie your debt consolidation loan to your 401k fund.

Will credit card debt consolidation affect my home loan?

No. It will not affect your home loan unless you tie your credit card debt consolidation with your mortgage. This should be avoided so as not to risk losing your home.

How many times can you consolidate credit card debt?

If you do it right, you should only consolidate your credit card debt once.

Can you consolidate your spouse's credit card debt?

The only way you could consolidate your spouse’s credit card debt is if they choose to co-sign the consolidation loan.

Can you consolidate credit card and civil judgment?

Credit card consolidation is one of the possible options you can take to meet payments for your credit card debts after civil judgment on the court.

Can you consolidate credit cards that were charged off?

Yes. Balance from your charged off accounts will still appear on your account. You can obtain debt consolidation loan to pay off these balances.

Consolidation and Credit Score

Consolidating your credit card debts and being able to pay it off successfully can greatly boost your credit score. Find the most common questions that address the issue of credit card consolidation and its impact on your credit score.

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How to consolidate credit card debt without hurting your credit?

Consolidating your credit card debt won’t hurt your credit score if you commit to meeting your monthly payments. This will enable you to help improve your credit score over time.

How does credit card consolidation affect your credit?

Consolidating credit cards can affect your credit in various ways. If you decide to take out a personal loan to consolidate credit card debts, this will lower your credit utilization and consequently causing your score to go up. Meanwhile, paying off your debts can also improve your credit score.

How to consolidate credit card debt with poor credit?

When you have poor credit, it is important to carefully consider and compare your debt consolidation loan options. It is also a good idea to transfer your existing balances to a new card with lower interest.

How to consolidate credit card debt with fair credit?

If you have fair credit, it should be easy to find credit card debt consolidation companies that can offer you with favorable interest rate. Make sure that the new loan has a lower interest rate compared to your existing debts.

Will consolidating credit card debt improve credit score?

Consolidating credit card debt offers the opportunity to boost your credit score. For that to happen, you must commit to making payments to lower your debt balance.

Where to Consolidate Credit Card Debt

Finding the best place to consolidate your credit card debt is not easy. In this section, you will find the common questions and their corresponding answers to the process of credit card debt consolidation.

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What is the best credit card consolidation program?

The goal of consolidating loans is to lower your monthly payments and get a lower interest rate (versus your current debt/loan terms). Find a credit card consolidation program that matches these requirements.

How to consolidate credit cards with Capital One?

Capital One has this offer known as card combining. This is available upon the customer’s request, which is a method of merging several credit card accounts into one. The goal is to make it easier to manage single payments instead of multiple credit card payments per month.

How to consolidate credit card debt chase?

There are three types of credit card debt consolidation offered by Chase: balance transfers, debt consolidation loans, and cash-out refinance.

What bank does credit card consolidation?

There are several banks that offer credit card consolidation which includes Earnest, SoFi, Citizens Bank, and Freedom Plus, to name a few.

How to consolidate high interest credit cards with Navy Federal?

Navy Federal Credit Union offers debt consolidation loans for credit cards. You can visit their website to learn more about the process of applying for credit card consolidation on your high interest cards.

Should I consolidate credit card debt with a SoFi loan?

If you have decided to consolidation, taking out a personal loan from SoFi is a great option. This will help to substantially lower the amount you have to pay each month for your debt.

Is BBVA compass good for consolidating credit card debt?

If you want to get rid of high-interest credit cards, BBVA Compass offers their Express Personal Loan to consolidate your loans.

Do credit card consolidation companies work?

You may choose to work with credit card consolidation companies to manage your debts and improve your credit score. But you can do it on your own if you can find personal loans with lower interest rates and better payment structure.

Does discover consolidate credit card?

Yes. Discover offers a credit card consolidation loan but on a fixed rate. Your monthly payments won’t change over the course of your debt repayment.

Will banks consolidate credit card debt?

Yes. There are many banks that offer credit card debt consolidation loans to help you manage debt payments.

Does Wells Fargo do credit card consolidation?

Yes. Wells Fargo offers loans that will enable you to consolidate your credit card debts.

How to consolidate credit card debt with Bank of America?

Bank of America offers credit card debt assistance. One of the options available is the Clean Sweep debt consolidation loan, which is designed to help their customers manage their debt with a predictable and consolidated monthly payment.

Can I consolidate my credit card debt with a HELOC?

Using HELOC to pay off your credit card debt offers a wide range of benefits. The most obvious benefit is the ability to pay lower interest rate (even for those with poor credit). The interest paid on your consolidated debt is also tax deductible.

Carl Andrews


Carl has years of experience helping people tackle debt. As a Senior Financial Advisor, he knows the ins and outs of debt consolidation and debt management. He holds a Masters Degree in Finance and according to him, not all debt problems are the same and that’s why it’s important to take a look at the different options available for your situation.

 

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