How to consolidate debt: the four ways
There are four ways to consolidate debt: a loan, a balance transfer card, a nonprofit payment plan or home equity. Here is what each costs and who it fits.
You owe on several cards, each with its own rate and due date. Cards averaged 22.36% and bank personal loans averaged 11.9% (Federal Reserve G.19). Consolidate debt only with a way that beats your cards.
The first thing to do is call a specialist. Here are the four ways they walk you through, matched to your credit score and balance.
What debt consolidation is
You trade several balances for one. The CFPB names two common routes: a loan and a balance transfer. A payment plan and home equity are the other two.
None of the four erase what you owe. Maria still owes $18,000 afterward. She pays a lower rate and has one due date.
A loan
A lender pays off your cards, and you repay one fixed amount each month. Maria borrows $18,000 over four years at 11.9% (Federal Reserve).
Her payment is $473 a month. It stays the same until the loan is paid off.
Enter your own balance in the loan calculator to see both sides. This fits a score in the 600s or better and a balance that needs years to pay.
- Call a specialist with every debt, its balance, its rate and its payment.
- Pick the way that fits: a loan, a balance transfer card, a payment plan, or home equity.
- Run your numbers on the calculator for that way.
- Compare two or three offers side by side.
- Pay off the old debts the day the money lands.
- Put the new payment on autopay and stop using the cleared cards.
A balance transfer
You move what you owe to a new card at 0% for a set number of months. The CFPB notes the card charges a fee up front, even at 0%.
This route fits a score near 700 and an amount you can clear inside the window. Maria cannot clear $18,000 in 18 months on her budget, so it is out for her.
A payment plan
A nonprofit counselor asks your card companies for lower rates. You then send one monthly amount to the agency.
The FTC says this can take 48 months or more. So plan on 48 months or more of steady payments.
Call and the specialist walks you through a debt management plan and what your monthly amount would be.
This fits anyone a lender turns down, or anyone who owes more than $25,000. You open no new credit and need no approval.
Home equity
You borrow against your house with a line of credit. You draw on it for a period that can last 10 years (CFPB).
Then you repay over 10 or 20 years, and the payments rise.
Credit unions averaged 7.61% on an 80% line in Q2 2025 (NCUA). That is the cheapest rate of the four.
It is also the biggest risk, because your house now secures card debt.
Which way to consolidate debt fits you
Start with your credit score and the balance.
A score of 700 or better and a balance you can clear in 18 months points to a balance transfer.
A score in the 600s, or a balance that needs years, points to a loan.
If you were denied, owe over $25,000, or are behind, pick a payment plan.
A large balance, steady income and a home point to home equity, with eyes open.
Maria took the loan. Call and the specialist matches your numbers to one of the four.
Is debt consolidation a good idea
Yes, when the new rate beats your cards and you stop adding to them.
No, when the new rate is at or above your cards. No, when the fee eats the first year of savings.
The spending that built the balances has to change. If it does not, the cleared cards fill back up beside the new loan.
Related topics
Before you borrow
Is consolidating my debt a good idea?
Yes, when the new rate is well under your card rate and you can keep up the payment. Maria moves $18,000 from 24% cards to an 11.9% loan and cuts her rate by more than half. A 25% loan with a fee would not help.
What is the smartest way to consolidate debt?
Pick the cheapest rate you qualify for without risking your home. That points to a credit union loan or a no-fee bank loan. A balance transfer suits a small balance and a strong score, and a nonprofit plan fits when a lender says no.
How long will it take to pay off $20,000 in credit card debt?
About 53 months, paying $600 a month at 22.36%. A four-year loan at 11.9% costs about $526 a month and ends in 48 months.
How can I pay $10,000 debt in 6 months?
It takes about $1,725 a month on a loan at 11.9%. Paying the cards directly takes about $1,667 a month. Six months rarely needs a loan, and the debt payoff calculator shows whether yours does.
How much is the payment on a $50,000 consolidation loan?
About $1,110 a month over five years at 11.9%, before fees. Upstart, LightStream and Wells Fargo publish loan ranges that include $50,000. Call and we compare those options with your cards.
What happens if I fall behind on my cards first?
If you are more than 60 days late, the card company can raise the rate on all your balances. That makes any new rate harder to beat.
Get one lower payment today
You have several cards, each with its own rate and its own due date. Cards averaged 22.36%, and past 60 days late your card company can raise the rate on every balance. Call now and a specialist goes through your cards for free and picks the way that beats them.