Will consolidating my credit card debt hurt my credit score?

There can be a small, temporary dip in your credit score when you apply for a new loan due to the hard inquiry. However, the long-term effects are often positive. By paying off multiple credit cards, you drastically lower your credit utilization ratio—a major factor in your score. An installment loan also adds to your credit mix. As you make consistent, on-time payments on your new loan, your payment history will strengthen, which can lead to a significant improvement in your credit score over time.

Can I get a loan to consolidate credit card debt with bad credit?

Yes, it is possible to get a personal loan for credit card consolidation even with bad credit (typically a score below 600). Some lenders specialize in working with borrowers in this range. However, you should expect to be offered a higher interest rate and potentially a lower loan amount compared to someone with good credit. Even with a higher rate, it may still be lower than your current credit card APRs, resulting in savings. It's important to check your rate with multiple lenders to find the best possible offer for your situation.

What happens to my credit cards after I pay them off with the loan?

Once you use the loan funds to pay your credit card balances down to zero, the accounts remain open. It is generally not recommended to close all of them at once, as this can reduce the average age of your credit history and negatively impact your score. A common strategy is to keep your oldest account open and perhaps use it for a small, recurring charge that you pay off in full each month to keep it active. For the other cards, you can simply cut them up and stop using them to avoid the temptation of accumulating new debt.

How quickly can I get the funds to pay off my credit cards?

The funding process for personal loans is typically very fast, especially with online lenders. After you are approved and have electronically signed your loan documents, the funds are often deposited directly into your bank account via ACH transfer. This can happen as quickly as the next business day, though it may sometimes take 2-3 business days depending on the lender and your bank. Some lenders even offer an option to pay your creditors directly, further simplifying the process for you.

Is it better to use a personal loan or a balance transfer for cards?

The best choice depends on your debt amount and financial discipline. A balance transfer card with a 0% introductory APR can be ideal if you have a smaller amount of debt that you are certain you can pay off completely within the promotional period (e.g., 18 months). A personal loan is often the better way to pay off credit card debt if you have a larger balance that will take several years to eliminate. It provides the structure of a fixed payment and a set payoff date, removing the risk of a high-interest rate kicking in later.

Can I include store credit cards in my debt consolidation loan?

Absolutely. A personal loan for debt consolidation can be used to pay off various types of unsecured debt. This includes major credit cards (like Visa, Mastercard, Amex), retail store cards, gas cards, and even other high-interest personal loans. The key is that the debt is unsecured, meaning it isn't backed by collateral like a car or a house. Consolidating high-interest store cards is an excellent use of a personal loan, as those cards often carry some of the highest APRs.

The Best Way to Pay Off Credit Card Debt

For individuals with multiple high-interest credit cards, a personal loan can combine your balances into one lower-rate, manageable monthly payment.

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Feeling Weighed Down by Credit Card Bills?

High interest rates eat up your payments, making it feel impossible to lower your balance.
A fixed-rate loan can significantly lower the amount of interest you pay, so more of your money goes toward the principal.
Juggling multiple due dates and minimum payments across different cards is stressful and easy to miss.
Combine everything into one single, predictable monthly payment that's easier to budget for and manage.
Maxed-out cards are hurting your credit score and limiting your financial flexibility.
Paying off cards with an installment loan can lower your credit utilization, potentially improving your credit score.
Balance transfer offers seem good, but the introductory period is short and the regular APR is still high.
A personal loan provides a clear payoff date with a consistent interest rate for the entire life of the loan—no surprises.

Simplify Your Finances with a Credit Card Consolidation Loan

If you're dealing with balances on multiple credit cards, you know the cycle. The interest charges keep piling up, and even when you make the minimum payments, the principal barely budges. A personal loan for credit card consolidation is designed specifically to break this cycle. It's an unsecured loan that provides you with a lump sum of cash, which you then use to pay off all your existing credit card balances in full. Instead of multiple high-interest debts, you're left with one loan, one monthly payment, and often, a much lower interest rate. This strategy isn't just about convenience; it's about creating the fastest way to pay off credit cards and taking a definitive step toward financial freedom.

Millions
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How a Personal Loan Helps You Pay Off Cards Faster

The primary advantage of using a loan to pay off cards is the switch from high, variable interest rates to a single, fixed rate. The average credit card APR can be over 20%, while personal loan rates can be significantly lower for qualified borrowers. This rate reduction means a larger portion of your monthly payment goes directly toward reducing your principal balance, not just servicing interest. This fundamental shift accelerates your debt payoff timeline, saving you a substantial amount of money over the life of the loan. It transforms your debt from a lingering problem into a manageable project with a clear finish line.

Furthermore, a credit card relief loan provides structure and predictability. Credit cards are a form of revolving debt, designed to be used and paid down repeatedly without a fixed end date. This can trap consumers in a cycle of minimum payments that extends for decades. A personal loan, on the other hand, is an installment loan. You borrow a fixed amount and pay it back over a set term—typically three to five years. You'll know exactly how many payments you have left and the precise date you'll be debt-free. This clarity is a powerful motivator and a critical component of a successful debt management plan.

See What Your New Payment Could Be

A lower rate could save you thousands. Check your eligibility in minutes without impacting your credit score.

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Get Your Consolidation Loan in 3 Simple Steps

1
Apply Online in Minutes
Fill out our secure online form with some basic information about yourself and your finances. This initial check is a soft inquiry and won't affect your credit score.
2
Review and Select Your Offer
If you qualify, you'll see your loan options, including the amount, APR, and term length. Choose the one that best fits your budget and goals.
3
Get Funded and Pay Off Your Cards
Once you e-sign your loan agreement, funds can be deposited directly into your bank account, often as soon as the next business day. You can then use the funds to pay off each of your credit card balances.

Example scenario

I had three different cards with balances over $15,000 total. The interest was killing me. Getting one loan made it so much easier to manage, and I'm actually seeing the balance go down for the first time in years.

David M.·Customer from Texas

Example: How Consolidation Can Reduce Costs

Card 1 Balance (24.99% APR)

$5,000

$104/mo interest

Card 2 Balance (21.50% APR)

$8,000

$143/mo interest

Card 3 Balance (28.00% APR)

$4,500

$105/mo interest

Estimated monthly

$389/mo

Combined into one $17,500 loan over 5 years at 11.99% APR

In the scenario above, the borrower is paying over $350 each month just in interest, with minimum payments barely making a dent in the $17,500 total debt. By consolidating into a single personal loan with a lower, fixed APR, the total monthly payment becomes predictable and manageable. More importantly, a significant portion of that $389 payment goes towards the principal, ensuring the debt is paid off completely within the 5-year term. This is the best way to pay off credit card debt for those seeking a structured solution.

Loan amount: $5,000 – $40,000
APR: 7.99% – 35.99%
Term: 24 months – 60 months

Your actual APR depends upon credit score, loan amount, loan term, and credit usage & history. For example, a $10,000 loan with a 60-month term and a 12.99% APR would have a monthly payment of $227.47. Not all applicants will be approved.

Personal Loan vs. Balance Transfer Cards

When deciding how to get a loan for credit cards, many people consider balance transfer cards alongside personal loans. While a 0% introductory APR on a balance transfer card can be appealing, it's crucial to understand the differences. Balance transfer offers are temporary, typically lasting 12 to 21 months. If you can't pay off the entire balance within that window, the remaining debt will be subject to a much higher standard APR. They also often come with balance transfer fees, typically 3-5% of the amount transferred, which is added to your principal.

Comparing Your Consolidation Options

	Personal Loan	Balance Transfer Card
Interest Rate	Fixed APR (e.g., 8-35.99%) for the life of the loan.	0% intro APR for 12-21 months, then a high variable APR.
Payoff Timeline	Fixed term (e.g., 3-5 years) with a clear end date.	No fixed term; depends on your ability to pay before the intro period ends.
Loan Amount	Typically higher limits ($5k-$40k+), good for large balances.	Credit limit may be lower than your total debt, requiring multiple cards.
Best For	Larger debt amounts that require several years to pay off.	Smaller debt amounts you are confident you can pay off within the 0% intro period.

Find Out What You Qualify For

Our simple form helps you see potential loan offers without any obligation or impact on your credit score.

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What Lenders Look For

Credit Score: Most lenders prefer a FICO score of 600 or higher. A score above 670 will typically unlock more competitive interest rates.
Verifiable Income: You'll need to show a steady source of income through pay stubs, bank statements, or tax returns to prove you can afford the monthly payments.
Debt-to-Income (DTI) Ratio: Lenders look at your total monthly debt payments divided by your gross monthly income. A DTI below 43% is generally preferred.
Credit History: A history of on-time payments and a mix of credit types can strengthen your application. Recent delinquencies can be a red flag.

If you are looking to consolidate credit card debt with bad credit, it may still be possible, though rates will be higher. To strengthen your application, ensure all information is accurate, check your credit report for errors, and consider including all sources of income. Even a small improvement in your credit score before applying can make a significant difference in the rates you're offered.

Common Pitfalls to Avoid After Consolidation

Securing a personal loan for credit card payoff is a powerful first step, but true success depends on your habits moving forward. Here are some common mistakes to avoid:

Running Up New Balances: After paying off your cards, the newfound zero balances can be tempting. Avoid using them for new purchases you can't pay off immediately. The goal is to eliminate debt, not create space for more.
Not Creating a Budget: Your consolidation loan gives you a predictable payment. Build a monthly budget around it to ensure you can comfortably make payments and identify areas where you can save.
Ignoring Loan Fees: Some personal loans come with an origination fee (typically 1-8% of the loan amount), which is deducted from your loan proceeds. Factor this into your calculations when determining how much you need to borrow.
Closing All Your Old Accounts: While it prevents you from using the cards, closing all your old credit accounts at once can lower your average age of credit and potentially hurt your credit score. Consider keeping your oldest card open with a zero balance.

Frequently Asked Questions

Will consolidating my credit card debt hurt my credit score?
There can be a small, temporary dip in your credit score when you apply for a new loan due to the hard inquiry. However, the long-term effects are often positive. By paying off multiple credit cards, you drastically lower your credit utilization ratio—a major factor in your score. An installment loan also adds to your credit mix. As you make consistent, on-time payments on your new loan, your payment history will strengthen, which can lead to a significant improvement in your credit score over time.
Can I get a loan to consolidate credit card debt with bad credit?
Yes, it is possible to get a personal loan for credit card consolidation even with bad credit (typically a score below 600). Some lenders specialize in working with borrowers in this range. However, you should expect to be offered a higher interest rate and potentially a lower loan amount compared to someone with good credit. Even with a higher rate, it may still be lower than your current credit card APRs, resulting in savings. It's important to check your rate with multiple lenders to find the best possible offer for your situation.
What happens to my credit cards after I pay them off with the loan?
Once you use the loan funds to pay your credit card balances down to zero, the accounts remain open. It is generally not recommended to close all of them at once, as this can reduce the average age of your credit history and negatively impact your score. A common strategy is to keep your oldest account open and perhaps use it for a small, recurring charge that you pay off in full each month to keep it active. For the other cards, you can simply cut them up and stop using them to avoid the temptation of accumulating new debt.
How quickly can I get the funds to pay off my credit cards?
The funding process for personal loans is typically very fast, especially with online lenders. After you are approved and have electronically signed your loan documents, the funds are often deposited directly into your bank account via ACH transfer. This can happen as quickly as the next business day, though it may sometimes take 2-3 business days depending on the lender and your bank. Some lenders even offer an option to pay your creditors directly, further simplifying the process for you.
Is it better to use a personal loan or a balance transfer for cards?
The best choice depends on your debt amount and financial discipline. A balance transfer card with a 0% introductory APR can be ideal if you have a smaller amount of debt that you are certain you can pay off completely within the promotional period (e.g., 18 months). A personal loan is often the better way to pay off credit card debt if you have a larger balance that will take several years to eliminate. It provides the structure of a fixed payment and a set payoff date, removing the risk of a high-interest rate kicking in later.
Can I include store credit cards in my debt consolidation loan?
Absolutely. A personal loan for debt consolidation can be used to pay off various types of unsecured debt. This includes major credit cards (like Visa, Mastercard, Amex), retail store cards, gas cards, and even other high-interest personal loans. The key is that the debt is unsecured, meaning it isn't backed by collateral like a car or a house. Consolidating high-interest store cards is an excellent use of a personal loan, as those cards often carry some of the highest APRs.

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Personal loan disclosure

Money Savvy is not a lender. We are a marketing service that connects consumers with participating lenders. Rates, amounts, and terms vary by lender, your credit history, and other factors.

Loan amounts: $1,000 – $100,000
Repayment terms: 3 – 84 months
Min APR: 5.99%
Max APR: 35.99%
Origination fees: 0% – 10% of the loan amount
Late fees: May apply; vary by lender

Representative example: A $10,000 loan with a 36-month term at an 18.99% APR would have an approximate monthly payment of $366.39 and a total cost of $13,190.04, including interest and a $500 origination fee.

Your actual APR depends on your credit score, income, and other factors. Only borrow what you can afford to repay.

California residents: California Financing Law disclosures available upon request.