Pros and cons of consolidating credit card debt Adult 18
» MORE: Nerd Wallet’s best balance transfer credit cards Pros: Back to top You can use an unsecured personal loan from your local bank or credit union or an online lender to consolidate credit card or other types of debt.
The loan may give you a lower interest rate on your debt or help you pay it off faster.
And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free. Ideally, that new debt has a lower interest rate than your existing debt, making payments more manageable or the payoff period shorter.
We believe everyone should be able to make financial decisions with confidence. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. " Debt consolidation is a strategy to roll multiple old debts into a single new one.
Lenders don’t charge fees for paying off your loan early, but they may charge upfront origination fees that range from 1% to 5% of your loan.
Some also send money directly to your creditors, increasing the odds of successful debt consolidation.
You’ll need a good to excellent credit score — above 690 — to qualify for most cards.
Make a budget to pay off your debt by the end of the introductory period, because any remaining balance after that time will be subject to a regular credit card interest rate.
Online lenders typically let you apply for a debt consolidation loan without affecting your credit score.Consolidation works best when your ultimate goal is to pay off debt.The four most effective ways to consolidate credit card debt are: This type of credit card charges no interest for a promotional period, often 12 to 18 months, and allows you to transfer all your other credit card balances over to it.Nerd Wallet recommends visiting your local credit union first.Most credit unions offer their members flexible loan terms and lower interest rates than online lenders, especially if you have a low credit score.
» MORE: Compare personal loan rates on Nerd Wallet Pros: Back to top If you’re a homeowner, you can take out a loan or line of credit on the equity in your home.