How Debt Consolidation Works
If you're juggling multiple credit card balances at different interest rates, a debt consolidation loan combines them into a single new loan — ideally at a lower fixed rate than your current average. Instead of tracking several due dates and minimum payments, you make one predictable payment each month until the loan is paid off.
💡 Consolidation only saves money if the new rate is meaningfully lower than your current average credit card APR. Compare your current weighted average rate against any offer before committing.
Is Debt Consolidation Right for You?
- You have multiple credit card balances with rates above 20%
- You have stable income to support one fixed monthly payment
- You're disciplined about not running the paid-off cards back up
Credit Cards vs. a Consolidation Loan
| Revolving credit cards | Consolidation loan | |
|---|---|---|
| Typical APR | 20%–29%+ (variable) | 5.99%–35.99% (fixed, depends on credit) |
| Payment structure | Multiple minimum payments | One fixed monthly payment |
| Payoff timeline | Open-ended if only minimums paid | Fixed term, typically 12–60 months |
| Rate changes | Can rise with market rates | Locked in for the loan term |
Frequently Asked Questions
How does debt consolidation work?
A debt consolidation loan pays off your existing high-interest debts (like credit cards) and replaces them with a single new loan, ideally at a lower interest rate and one fixed monthly payment.
Will debt consolidation hurt my credit score?
Checking your rate uses a soft inquiry with no score impact. Taking the loan may temporarily affect your score, but paying down revolving credit card balances often improves your score over time.
Ready to see your options? Compare debt consolidation offers from our full lender network in under 2 minutes.
Example: a $35,000 loan at a 24.50% APR over a 24-month term would carry an estimated monthly payment of $1,859.23. Actual payments vary by lender and depend on your approved rate and term.