Published in: Credit Cards | Nov. 1, 2018

4 Situations When You Should Consolidate Your Credit Card Debt

By:  Lyle Daly

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High credit card balances can be difficult to pay off. Find out when it would be a smart decision to consolidate your credit card debt with a balance transfer.

Man looking at two diverging paths and scratching his head

Image source: Getty Images

While any type of debt can make life stressful, credit card debt is often the hardest to deal with. The average credit card interest rate is almost 17%, but credit cards have comparatively low minimum payments and let you keep spending until you reach your credit limit, so debt can grow quickly.

A common way to get control of credit card debt is by consolidating it. You can do this by getting a personal loan or a balance transfer credit card, using that to pay all your credit card debt, and then paying off that one loan or credit card.

This isn’t always the best solution, but there are several situations when consolidating your credit card debt is the best available option.

1. When it helps you pay less

The biggest perk of debt consolidation is that you can cut down how much interest you pay going forward. Personal loans tend to have much lower interest rates than credit cards, and balance transfer cards usually have 0% intro APR offers for anywhere from six to 21 months.

Just make sure you calculate what the fees will cost you before assuming that debt consolidation will be cheaper. Most credit cards have balance transfer fees, and personal loans may have origination fees (although these would be accounted for in the APR).

Here’s one example of how much money debt consolidation could save you on the same amount of debt and with the same monthly payment amount:

Repayment method

Starting balance

Monthly payment


Time to repay

Total amount paid

Pay off credit cards, no consolidation




24 months


Consolidate with balance transfer card

$5,150 (with 3% balance transfer fee)


0% for 12 months, then 17%

22 months


Consolidate with personal loan




22 months


Source: Author calculations

2. When you’re having trouble staying on top of all your monthly payments

One of the challenges of owing money on multiple credit cards is keeping track of all the payments. Sure, you can set reminders or pay each card on the same day, but the fact is that making one payment is better than making three, or four, or seven. It’s less to remember and doesn’t take as much time out of your day.

By consolidating your credit card debt, you’ll only have one payment to make every month, which is more convenient. It also reduces your likelihood of missed payments that result in extra fees.

3. When you can’t make all your payments

Since you should get a lower interest rate after consolidating your credit card debt, you may not need to pay as much per month. This can be a big help if you were barely getting by with your payments before.

If you use a loan as your debt-consolidation method, you can also choose a term length that ensures you have a manageable monthly payment. Just don’t get a longer loan than necessary so you can have the smallest possible payment amount, because you’ll end up paying more interest the longer your loan lasts.

4. When your credit utilization is too high

Credit utilization plays a big part in your credit score. With too much credit card debt, you could have high utilization that harms your score.

But when the credit bureaus look at your credit utilization, they focus on revolving lines of credit, such as credit cards. Although installment loan debt also matters, it isn’t nearly as detrimental, so paying off credit card debt with a loan can improve your credit score. If you qualify for a balance transfer card, opening one could also help your score, because the new card will add to your total available credit.

Getting free from credit card debt

Consolidating credit card debt isn’t always the right move, but in the situations above, it’s worth looking into. Check out what consolidation options are available to you and run the numbers to see how much money you could save.

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