If you have credit card debt, you’re not alone. The smartest strategy to pay off credit card debt is through credit card consolidation.



When you consolidate credit card debt, you combine your existing credit card debt into a single loan with a lower interest rate. With a lower interest rate, you can save money each month and pay off debt faster.

There are many factors that guide your decision to consolidate credit card debt, including:

  • the amount of credit card debt
  • the interest rate
  • your credit score
  • if you have home equity

The most popular reason for credit card consolidation is to pay off debt. Also, credit card consolidation can be used interchangeably with “refinance credit cards.”


3 Ways To Consolidate Credit Card Debt

Here are 3 popular ways to consolidate credit card debt:

  1. Consolidate with a personal loan
  2. Get a 0% APR credit card
  3. Tap home equity

Let’s explore each option.

1. Consolidate with a personal loan

  • A personal loan is an unsecured loan with a fixed monthly rate that helps you pay off credit card.
  • The goal is to get a lower interest rate than the interest rate on your credit cards. Personal loans may start as low as 5.99% APR.
  • With a fixed interest rate, your monthly payment never changes. In comparison, credit cards have variable interest rates, which can change over time.
  • Your credit score may increase because a personal loan is considered an installment loan.
  • Personal loans may have a one-time origination fee, which is included in the loan’s APR.
  • To qualify for a personal loan, typically you need good to excellent credit. With many lenders, you can apply directly online.


2. Get A 0% APR Credit Card

  • A 0% APR credit card is a helpful tool to consolidate high interest credit card debt.
  • A 0% APR credit card is available if you have good to excellent credit.
  • You can transfer your credit card balance to a new 0% APR credit card.
  • As its name suggests, a 0% APR credit means you don’t accrue any new interest on your credit card balance for a pre-determined period such as 12-18 months.
  • Some 0% APR credit card also offer 0% APR on new purchases as well during the same time period.
  • Once the 0% APR period ends, interest will accrue on your balance and regular monthly payments will commence.
  • Some 0% APR credit cards charge a small fee for a balance transfer, but some 0% APR cards have no balance transfer fee.


3. Tap home equity

  • A third option is to tap the equity in your home, and then use the proceeds to pay off high interest credit card debt.
  • Typically, the interest rate on a home equity loan is lower than the interest rate on your credit card debt.
  • To use this strategy, you must own a home and have sufficient equity in your home.
  • You can use a home equity loan or a home equity line of credit.
  • Unlike a personal loan, this is a secured loan, which means you could lose your home if you default on your loan.

By Zack Friedman, Contributor

© 2020 Forbes Media LLC. All Rights Reserved

This Forbes article was legally licensed through AdvisorStream.

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