What is Credit Card Consolidation?

January 09, 2018 · 4 minute read

What is Credit Card Consolidation?

Credit card consolidation is the practice of combining your credit card balances into one loan. It allows you to pay off one loan with a manageable interest rate, instead of paying off multiple credit cards with sky-high interest rates.

If you’re not quite sure how that would help your debt management, think of it this way: We all have that one closet or drawer that is just filled to the brim with random stuff—those knick knacks, boxes, and clothes that you just don’t have room for. It gets so bad that either you’re too afraid to open your closet, or the closet is so full that you physically can’t open it.

That closet? It’s your credit card debt. You might have one, two, three, or four cards where you’re making your minimum payments, but other than that, it’s easiest to put it out of sight, out of mind. It’s understandable; credit card debt can be overwhelming to the point that it seems easier to just keep the closet door closed.

But what if you only had one payment to make? Instead of having to remember four payment deadlines (and accruing four separate interest rates), credit card consolidation can make it possible to just have one payment.

Not only is debt easier to manage and pay off with one loan; the best part is that consolidating your credit card debt often means that you’ll also get a lower interest rate, which can lower your monthly payments. (This is especially true considering that, at 15.59%, average credit card interest rates are at a record high .)

Benefits of Credit Card Consolidation

Credit card consolidation is a tool to help make your debt more manageable. While it won’t magically whisk away your debt, it can give you the financial confidence you need to get rid of it altogether. Consolidating your credit card debt can help you pay the debt off sooner, at a lower interest rate, and give you emotional and financial relief.

Related: Wondering how much you are paying in interest? Use our Credit Card Interest Calculator to find out.

And because all of your debt is combined into one loan, you’ll just have to remember only one payment deadline, reducing the chance of late payments. Unlike filing for bankruptcy or defaulting, credit card consolidation doesn’t negatively affect your credit. It provides you with a tangible solution to tackle your credit card debt head on.

Who Should Consider Credit Card Consolidation

You should consider credit card consolidation if you have a large amount of debt and want a simple, more streamlined way to manage your credit card payments. Understanding whether this is the right avenue for you also depends on your situation:


Have a larger plan to pay off your debt.

Is credit card consolidation right for you?

Yes! Credit card consolidation isn’t a quick fix. It works best if you have a long-term debt management plan.


Have manageable debt.

Is credit card consolidation right for you?

Yes! A simple way to figure out if your debt is manageable is if you answer “yes” to either of the following questions: Can you pay off your debt in five years? Is your debt less than half your yearly income?


Are serious about paying off your debt.

Is credit card consolidation right for you?

Yes! Sometimes credit card consolidation can boost your confidence a little too much, resulting in a more relaxed approach to debt payoff. You can avoid this pitfall by taking your debt payment plan seriously and committing to making the necessary payments each month.


Can pay off your credit card debt in six months or less.

Is credit card consolidation right for you?

Probably not. If you can pay off your debt that quickly, then the savings you’d receive from consolidating your credit card debt would be minimal.

When to Consider Credit Card Consolidation

Lenders take your credit history into account when considering you for a personal loan to consolidate your credit card debt. That means that if you have more than a few late payments and a low credit score, you’re less likely to be approved for a loan with a competitive interest rate.

If that’s the case for you, it might be best to explore alternative debt management services with a credit counselor so that you can raise your credit score, increasing your chances of being approved for a loan with a competitive rate.

But if you’ve been making on-time payments, have a consistent job history, and have a good credit score, then now might be a good time to consolidate your credit card debt. The sooner you can set yourself up to pay off your debt successfully, the better, and credit card consolidation can be one good way to go about it.

Consolidate your credit card debt today with a personal loan. Learn more to see what rates you may qualify for.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit.

TLS 1.2 Encrypted
Equal Housing Lender