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How to Consolidate Credit Card Debt
7 Min Read | Last updated: June 16, 2025
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
Debt consolidation can help simplify your finances and reduce monthly payments. Learn how you can consolidate credit card debt with these simple steps.
At-A-Glance
- Debt consolidation combines multiple balances into one loan payment, potentially at a lower interest rate.
- The most popular methods of debt consolidation include balance transfer credit cards, personal loans, and home equity loans.
- The best option for debt consolidation depends on your financial goals, credit score, and the amount and type of debt you hold.
Credit card debt consolidation holds an attractive promise: You can roll up several credit card balances into one bigger loan with a single monthly payment. Paying off a single loan can make it easier to manage on-time bill payments, and your monthly payment may even be lower than the sum of your previous loan payments. Say goodbye to juggling different interest rates, amounts owed, due dates, etc.; say hello to a single monthly payment.
However, the reality of how to consolidate debt can be complicated. For one thing, you may need to be in good financial shape to be eligible for some options.1 For another, restructuring your credit card debt might actually mean higher total costs over the life of the loan due to lengthier repayment terms. To ensure you're making the right choice, it’s important to accompany any debt restructuring with a fundamental review of your overall spending habits.
Debt Consolidation Calculator
Use this tool to help decide if debt consolidation is right for you. Enter the balance, interest rate, and monthly payment amounts for your various ongoing debts below.
Step 1 of 3
Your current debt summary
This is how much debt you have right now, your total monthly payments, and average APR (Annual Percentage Rate) across all debts.
TOTAL DEBT
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CURRENT TOTAL MONTHLY PAYMENTS
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AVERAGE APR
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Customize Your Consolidation Loan
Enter an annual interest rate and potential term length you might target to pay off one consolidated loan.
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| METRIC | BEFORE CONSOLIDATION | AFTER CONSOLIDATION |
|---|---|---|
| Debt Amount | $0 | $0 |
| Monthly Payment | $0 | $0 |
| Annual Interest | 0% | 0% |
| Total Interest Paid | $0 | $0 |
| Total Payments to pay | $0 | $0 |
| Time to Pay Off Debts | 0 months | 0 months |
| Total Savings | $0 |
Debt Amount
BEFORE CONSOLIDATION $0
AFTER CONSOLIDATION $0
Monthly Payment
BEFORE CONSOLIDATION $0
AFTER CONSOLIDATION $0
Annual Interest
BEFORE CONSOLIDATION 0%
AFTER CONSOLIDATION 0%
Total Interest Paid
BEFORE CONSOLIDATION $0
AFTER CONSOLIDATION $0
Total Payments to pay
BEFORE CONSOLIDATION $0
AFTER CONSOLIDATION $0
Time to Pay Off Debts
BEFORE CONSOLIDATION 0 months
AFTER CONSOLIDATION 0 months
Total Savings
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This calculator is intended for illustrative purposes only and is not intended to offer any tax, legal, financial or investment advice. The terms and conditions of loans will vary by lender and may include additional fees or other terms that the calculator does not contemplate. If you have questions, please consult your own professional legal, tax and financial advisors.
Actual interest earned will vary, depending on your financial institution and their method of calculating interest.
Actual interest earned will vary, depending on your financial institution and their method of calculating interest.
What Is Credit Card Debt Consolidation?
Credit card debt consolidation works by shifting several debt payments into one loan with a single monthly payment. For example, if you had three credit cards with balances of $1,500, $2,500, and $1,000, you could take out a debt consolidation personal loan for $5,000 and use it to pay off each credit card.
Then, you’d begin to make payments toward the single loan of $5,000 until it’s paid off, being sure not to add more credit card debt in the meantime. The major benefits of debt consolidation include:
- Simplifying debt management thanks to a single monthly payment
- The potential to lower your monthly payment
- The potential to save money over time by taking on a loan with a lower interest rate
Following the nine steps outlined below can help clarify how to consolidate credit card debt or other types of unsecured debt, step by step.
The 9 Steps of Credit Card Debt Consolidation
- Determine if you’re a good candidate for a consolidation loan.
- Sum up your outstanding credit card debts.
- Decide which debts make sense to consolidate.
- Factor in both lower interest rates and longer repayment terms.
- Choose the right consolidation option for you.
- Arrive at the bottom line on your new monthly bill.
- Do a reality check before committing.
- Take out the loan and pay off your outstanding debts.
- Budget to avoid ending up back where you started.
Step 1: Determine if you’re a good debt consolidation candidate.
You may need to have a credit score that falls into the “good” credit score range. Otherwise, banks may charge higher interest rates if they agree to lend to you, and the consolidation loan may not be worth it.2
Step 2: Sum up your outstanding debts.
If your debt is small and could be paid off in a year with a few extra payments, the effort of pursuing debt consolidation might not be worthwhile for the small amount you might save.3
Did you know?
The average credit card debt for millennials has more than doubled since 2012 to over $6,600 in 2024.4 As the generation pursues competing financial priorities like buying a home, paying off student loans, and caring for aging loved ones, debt consolidation is something millennials should care about.
Step 3: Decide which debts to consolidate.
Not all debts are good candidates for consolidation. Debt consolidation works mainly for unsecured debt, like credit cards. It’s not as useful to mix in secured debt, such as home mortgages and auto loans, because their interest rates tend to be lower than personal loans.5,6 Consider your existing credit card balances and the interest rate that you’re paying on the cards. Does it make sense to consolidate these debts? Would you be able to lower your interest rate by doing so?
Step 4: Factor in both lower interest rates and longer repayment terms.
Here are some things to consider when analyzing how to consolidate debt:
- Secured vs. Unsecured
You can save money on interest charges if you consolidate credit card debt through a secured loan, such as a personal loan, “cash-out” mortgage refinancing, or a home equity line of credit (HELOC) because they generally have lower interest rates.7 - Short Term, Lower Interest
You may also save money on interest charges by taking out the shortest-term debt consolidation loan with a monthly payment you can afford.8 - Long Term, Lower Monthly Cost
Because you pay interest over a longer period, longer terms can sometimes push total loan costs higher, not lower, than the debt you were facing at the outset.9 This gives you a trade-off to consider: Is lowering your monthly expenses by taking out a longer-term debt consolidation loan worth the higher total cost in the long run?
Online calculators are available to crunch your specific numbers and estimate total costs.10
Step 5: Choose the right consolidation option for you.
Considering the different avenues could help determine your final choice. Here are some common debt consolidation options:
- Personal Loans
You can use a personal loan to pay off credit cards and other debt. The interest rate on personal loans tends to be lower than on credit cards or other high-interest debt.11 American Express Card Members may be eligible for an American Express® Personal Loan, which can give eligible Card Members the funds they need to pay off debt, making it an option worth considering if you’re looking to consolidate high-interest debt. - Home Equity
You could use your home’s equity to get a loan to pay off your credit card debt by using a home equity loan or home equity line of credit (HELOC). In either case, you are literally risking the roof over your head if you don’t make your new payments, so be sure you can afford the monthly loan payment before you commit. - Balance Transfer Credit Cards
If you’re looking to consolidate multiple credit card balances, you could consider a balance transfer credit card. A balance transfer fee might be required, but some credit card companies may waive that fee. Card issuers may offer a 0% introductory APR for a set period of time, but you’ll often need a good, very good, or excellent credit score to qualify.12 Before you apply, be sure you understand how a balance transfer might impact your credit score. - Debt Relief Service
Debt relief programs promise to help renegotiate your debt for you, but they’re not all above board. Consider checking with your state attorney general and local consumer protection agency to find a reputable debt relief service.13
Step 6: Determine your new monthly bill.
Whichever option you choose, it’s time to confirm you can afford to pay your new monthly bill on time and in full. Doing so can help you make the most of debt consolidation and maximize potential savings.
Step 7: Do a reality check before committing.
Before you commit, ask yourself whether there’s more you can do to adjust your spending and pay off credit card debt without a consolidation loan. You might consider checking with your creditors directly to see if you can negotiate lower interest payments or longer terms. A non-profit credit counselor may also provide support without a debt consolidation loan.
Step 8: Take out the loan and pay off your outstanding debts.
If you apply and are approved for a debt consolidation loan, you can then use the funds to pay off other debts. Once existing debts are paid, you can set up payment notifications or automate payments to your new debt consolidation loan to ensure you stay on track.
Step 9: Budget to avoid ending up back where you started.
After you’ve received a debt consolidation loan, it’s likely the right time to begin budgeting for your future spending and making a concerted effort to stick to your plan. You might look for new ways to track your spending or take it one step further by developing your own financial plan. Either way, it’s important to assess your spending habits so you can make the most of the opportunity to get out of debt for good.
The Pros and Cons of Credit Card Debt Consolidation
Pros
- Simplified financial management
- Lower monthly payments
- Could benefit your credit score, in the long term
Cons
- A longer repayment term means you might end up paying more in the long run
- You may need a good credit score to qualify for the most favorable interest rates and loan terms
- Your credit score could temporarily go down
Frequently Asked Questions
Debt settlement is a form of debt management where you or a company working on your behalf can attempt to settle debt with creditors for less than the original balance due. Debt consolidation is a way to restructure debt into a single monthly payment, but ultimately, you’re expected to still pay the full amount you owe.
Whether or not to pursue debt consolidation depends on your financial goals, credit score, and current financial situation. You may want to consult a financial professional to discuss the pros and cons of debt consolidation before you commit.
There are several potential risks to consolidating credit card debt, including incurring fees for balance transfers or loan origination, paying more in interest if you secure a longer loan term, and a temporary dip in your credit score when you apply for a new loan. However, the savings may be worth the risk, which is why it’s important to weigh the pros and cons before applying for a debt consolidation loan.
The Takeaway
Credit card debt consolidation can help simplify your finances, reduce monthly payments, and pave a path out of debt. But it’s not for everyone. Determining where you fit in requires weighing different approaches and how they fit your long-term financial goals. The nine steps here outline how to consolidate debt and provide a framework for finding what might be the best option for you.
1,2,3 “How to Consolidate Debt,” Experian
4 “Average Credit Card Debt by Age in 2024,” Experian
5,11 “Consumer Credit - G.19,” Federal Reserve Board
6 “30-Year Fixed Rate Mortgage Average in the United States,” FRED
7 “The best way to borrow against your home: HELOC, cash-out refi or home equity loan?,” Bankrate
8,9 “How to Choose the Best Loan Term for Your Needs,” Experian
10 “Debt Consolidation Calculator,” Calculator.net
12 “What does 0% APR mean?,” Bankrate
13 “How To Get Out of Debt,” Federal Trade Commission
Karen Lynch is a journalist who has covered global business, technology, finance, and related public policy issues for more than 30 years.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
