A personal loan for refinancing credit cards can offer a lifeline for consolidating credit card debt. The trick is finding the best debt consolidation loan to pay off credit cards at a lower interest rate that will help you save money.
Here’s how you can find the best debt consolidation loan with the most favorable terms that you have the best odds of qualifying for.
- What are the best credit card debt consolidation loans?
- What is credit card refinancing?
- What is the smartest way to consolidate credit card debt?
- Does credit card refinancing hurt your credit score?
- What is the best loan to consolidate credit card debt?
Max. Loan Amount
Min. Credit Score
|6.24% to 10.24%||$50,000||Not disclosed|
|6.74% to 17.99%||$50,000||650|
|5.99% to 24.99%||$35,000||660|
|3.99% to 19.99%||$100,000||670|
|6.99% to 22.23%||$100,000||Not disclosed|
|6.99% to 19.99%||$40,000||660|
|Not disclosed||$50,000||Not disclosed|
|5.99% to 24.99%||$40,000||600|
|5.99% to 35.99%||$50,000||640|
|6.99% to 19.49%||$50,000||660|
U.S. News selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria and customer service. Those with the highest overall scores are considered the best lenders.
To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. Personal loan companies are evaluated based on customer service ratings, interest rates, maximum loan term, minimum and maximum loan amounts, minimum FICO score, online features, and origination fees.
The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.
To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.
If you need money fast, Alliant Credit Union typically makes same-day online personal loans between $1,000 and $50,000. The $14 billion Chicago-based credit union, founded in 1935, is one of the biggest in the nation, with 600,000 members. In addition to personal loans, Alliant offers home and auto loans, credit cards, checking and savings accounts, individual retirement accounts, trust accounts, and insurance policies.
Although PenFed Credit Union – officially Pentagon Federal Credit Union – serves members of the armed forces, military associations, veterans and retirees, and their families, a military connection is not required to become a member. The credit union offers personal loans for eligible members and eligible co-borrowers in all 50 states, as well as in Guam, Puerto Rico and Okinawa, Japan.
LightStream is the online consumer lending division of Truist, which formed in 2019 from the merger of BB&T and SunTrust. SunTrust acquired the assets of online lender FirstAgain in 2012 and relaunched the business as LightStream. LightStream’s online personal loans range from $5,000 to $100,000 and can be used for nearly any reason. Personal loans are available to borrowers nationwide with good to excellent credit.
SoFi, short for Social Finance, offers personal loans of up to $100,000 to borrowers with very good to excellent credit. The nationwide lender was founded in 2011 and is known for offering loans with no fees. In addition to personal loans, SoFi offers student loans, auto and student loan refinancing, home loans, and small-business financing.
Upstart is a lending platform that uses artificial intelligence to improve access to affordable credit. Based in California and founded by former Google employees in 2012, Upstart also applies AI to reduce lending risks and costs for its bank partners. The lending intermediary provides unsecured personal loans from $1,000 to $50,000 to borrowers anywhere in the U.S. except West Virginia or Iowa.
Happy Money offers Payoff personal loans designed to consolidate credit card debt. It operates in all but two states and provides loans of up to $40,000. Happy Money is not a bank and instead works with lending partners that originate the loans. The California-based financial wellness company takes a psychological approach to money matters.
Best Egg is an online lender founded in 2014 that financial technology company Marlette Holdings Inc. owns and operates. Best Egg offers personal loans starting at $2,000 that can be used to cover medical bills, home remodeling and a variety of other expenses. Cross River Bank in New Jersey issues Best Egg loans, which can be funded in as little as one business day.
U.S. Bank has physical locations in more than 25 states and offers both short- and long-term personal loans with fixed annual percentage rates. Current customers may qualify to borrow up to $50,000 with a credit score of 660 or above, and options are available for noncustomers willing to open a checking or savings account.
When you shop around for the best personal loan interest rate, you can save. Compare your personal loan offers with national average trends for personal loans to know if you’ve found a good deal.
*Rate as of Mar. 16, 2022
Credit card debt consolidation rolls multiple credit card balances into one loan.
With a personal loan for debt consolidation, you borrow a lump sum of money – ideally at a low interest rate. You then use that money to pay off some or all of your high-interest credit card balances.
Taking out a personal loan is one of the best ways to consolidate debt for consumers who have substantial credit card debt, says Mark Victoria, head of unsecured lending at TD Bank. Going forward, you have a single monthly payment to make toward the debt consolidation loan.
Credit card consolidation can offer several financial benefits:
- You could save money on interest. If your consolidation loan has a lower interest rate than the annual percentage rate for the credit cards you pay off, you’ll pay less interest over time.
- There are fewer payments to juggle. Going from multiple credit card payments each month to a single monthly payment can help streamline your financial life.
- You may get out of debt faster. If you have a lower interest rate with a credit card debt consolidation loan, more of your monthly payment goes toward the principal.
There’s also a sense of relief. Debt consolidation gives you a concrete finish line when you know your debt will be paid off, says James Lambridis, founder and CEO of financial information site DebtMD. “An unsecured debt consolidation loan typically lasts from two to five years, so you can give yourself peace of mind that at the end of the term, you will be debt-free once and for all.”
Credit card consolidation has its drawbacks, as well:
- You might pay more interest. Not all loans are guaranteed to provide a lower interest rate than your credit cards, so do the math and make sure the consolidation will be monetarily worth it.
- You might grow your debt. When you pay off a card’s balance, you free up that card to use again – and thus add to your debt. Be sure to stop using the credit card while you pay off the consolidated loan.
You can use a balance transfer credit card to consolidate credit card debt at an introductory 0% interest rate. But balance transfer cards can be more limited than credit card debt consolidation loans.
You may need excellent credit to be approved for a high credit limit to cover all of your credit card balances. You should expect to pay a balance transfer fee, though this fee may be lower than the interest rate on a personal loan. Most balance transfer cards offer 0% interest for 12 to 18 months, which is a shorter term length than the typical personal loan.
Balance transfer cards are best suited for consolidating small credit card balances that you can pay off within the 0% promotional period. Personal loans can be a better solution for larger debt than you can expect to be approved for on a credit card and may take more time to pay off.
“If you don’t qualify for one of the top balance transfer credit cards, using a personal loan to consolidate debt is an excellent option. A loan gives you an opportunity to pay off your debt at a lower interest rate,” says Beverly Harzog, credit card expert and consumer finance analyst at U.S. News.
Other debt consolidation loans for credit card refinancing include home equity loans and 401(k) loans. These options can be problematic, as you risk losing your home or retirement savings if you default.
Find the Personal Loan That’s Right for You
Consolidating credit card debts using a personal loan can affect your credit score both positively and negatively. However, successfully paying off credit card debt using a personal loan should have a more positive than negative effect on your credit.
Applying for a loan to consolidate credit card debt can trigger a hard inquiry against your credit report, which can take a few points off your credit score. Most lenders allow you to check your rate and loan amount with a soft credit inquiry, which doesn’t affect your credit. Rate checks allow you to shop around for the best debt consolidation loan before you submit a formal application, which does trigger a hard inquiry.
Once you have a new loan open, that can affect the overall age of your credit. As a general rule, the older your account history, the better. Newer accounts could trim a few points off your score.
But inquiries and credit age are smaller factors than payment history and credit utilization, which a credit card refinancing personal loan can help with. Paying your new loan on time can improve your payment history, which accounts for 35% of your FICO score. If you’re paying off credit cards, that can improve your credit utilization ratio, which counts for 30% of your FICO score.
The two biggest mistakes to avoid with credit card debt consolidation loans are late payments and running up new balances on the cards you just paid off. Doing so can hurt your credit history and push you farther into debt.
Victoria says some people go in with the best intentions of consolidating into one loan at a lower rate. However, even though the debt has shifted, consumers should keep in mind that they still likely have access to the credit cards that got them there in the first place.
“Consolidating is the first step,” he says. “Changing spending habits should be the next priority.”
If you’re interested in the best debt consolidation loan to pay off credit cards, it helps to know how to compare consolidation loan companies. As you’re shopping around for a personal loan to eliminate credit card debt, consider these factors:
- Minimum loan amount.
- Maximum loan amount.
- Minimum and maximum loan repayment terms.
- Interest rate and APR.
- Loan fees, including origination fees, late payment fees and prepayment penalties.
- Funding and payment options.
- Minimum credit score and income requirements.
- Customer service reviews.
When looking for the best credit card debt consolidation options, it’s important to figure out what works best for your budget. That also means taking into account what your new monthly payment would be for a loan. Understand how long it will take you to pay it off and what you’ll pay in interest.
“You should only consolidate your debt if you’re able to lock yourself in at a lower interest rate and/or lower your monthly payment,” Lambridis says. He cautions that a lower credit score could translate to a higher interest rate on a credit card consolidation loan, potentially overriding any savings benefit.
Find out how fast you’ll receive funds: Some loan companies offer funding as soon as the next business day. If the lender offers direct payment, it can send funds directly to your creditors to pay off accounts.
Flexible payment options can help, too. Some lenders may allow you to set your payment due date, which can help you balance monthly payments in a way that works best for you.
- Consider the debt avalanche method. Pay off your credit card balances beginning with the highest APR, and therefore save the most money because you’re getting rid of high-APR debt first.
- Try the debt snowball method. Pay off your balances from the smallest debt to the largest debt. You’ll pay more interest, but this method will continually give you the psychological boost to keep going.
- Seek credit counseling. If you feel like you’re drowning in debt and have no hope of getting rid of it, speak with a credit counselor from an agency accredited by the National Foundation for Credit Counseling. Counseling will help you clarify what you need to do next.
PNC Bank can trace its history back to 1852 and the Pittsburgh Trust and Savings Co. Today, PNC Bank is the seventh-largest bank in the U.S., and it features a wide range of consumer and business banking services. Among its suite of products, PNC offers personal, unsecured installment loans up to $35,000. Applicants are considered based on satisfactory credit history, ability to repay and income.
Founded in 2005 and based in San Carlos, California, Oportun originates unsecured personal loans of up to $10,000 in 12 states. Loans are available in 30 additional states through Oportun’s partnership with MetaBank. The lender has no credit history requirement, making the loans an option for consumers with no credit or limited credit. In addition to unsecured personal loans, the lender offers secured personal loans to borrowers in Arizona, California, Florida, New Jersey and Texas.
LendingPoint is an online lender specializing in unsecured personal loans from $2,000 to $36,500 for borrowers with fair credit. The Georgia-based lender issues loans with annual percentage rates of 7.99% to 35.99% and repayment terms of two to six years to people in every state but Nevada or West Virginia. Funds may be available as soon as the next business day after the lender approves the loan and receives all documents.
FreedomPlus is an online lender affiliated with Freedom Financial Network offering personal loans from $5,000 to $50,000 and promising quick approval and disbursal. A prospective borrower can apply online and talk with a loan consultant. All loans available through FreedomPlus are made by New Jersey-based Cross River Bank.
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