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Consolidate Credit Card Payments

Consolidate Credit Card Payments
Mark Cappel
UpdatedMar 24, 2023
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    4 min read
Key Takeaways:
  • Balance transfer is one way to consolidate credit card payments.
  • A personal loan is another option, but the interest rate may be high.
  • Consider alternatives to a new loan.

3 Ways to Consolidate Credit Card Payments & 2 Alternatives to a Loan

There are three ways to consolidate your credit cards into one monthly payment, which we talk about below. However, before we explain how to consolidate credit card payments, a strong word of caution: You may not want to.

You may not want to consolidate your credit card payments for two reasons. First, with one or more credit cards at a zero balance, you may be tempted to charge! charge! charge! your way back to a high credit balance. A credit card balance consolidation should accompany a change in your behavior. Second, you may pay higher fees and interest if you miss or have a late payment on your big-balance account. At, we encourage people to take positive steps with their money, and a credit card consolidation may not be the right choice for everyone.

Let us look at your three debt consolidation options.

Quick Tip

Get a no-cost, no obligation analysis of your debt options from a pre-screened debt consolidation partner.

Balance Transfer

The balance transfer credit card offers are available only on certain credit cards, and only well-qualified, high credit score applicants receive these offers.

On cards offering a 0% rate for balance transfers, the 0% rate is for a limited time. If you do not pay off the debt you transferred onto the new card within the promotional period, the credit card issuer begins charging interest on the remaining balance. Balance transfers are not a feature of all credit cards, and most credit cards do not offer a balance transfer option. If you are trying to consolidate debt by transferring your current credit card balances to one account, you must shop for cards offering that feature and carefully review the terms of each card to determine which offer will save you the most.

Cash-Out Refinance

A cash-out refinance exchanges your existing mortgage loan for another with a larger balance. This is known as a "cash-out" refinance. The advantages of a cash-out refinance are the mortgage loan will almost certainly carry a lower interest rate than credit card debt, and is tax deductible. Paying off the credit card debt will result in a slight boost to your credit score.

There are significant disadvantages to consolidating debt with a cash-out refinance. Shifting unsecured debt to secured debt can create a difficult situation if you cannot afford the new mortgage payment. You could put yourself at risk of foreclosure. Refinancing to a 30-year loan means the total consolidation cost could be very high, too. Of course, you could refinance to a 15-year loan that would have a low interest rate. If you can afford the payment, a 15-year loan would be a less costly choice for a debt consolidation refinance.

Personal Loan

Alternatives to Consolidate Credit Card Payments

Personal loans, also called a signature loan, are a loan based only on your promise to repay the loan. They are risky for lenders due to their lack of security (such as a house or car as collateral) and high default rate. As a result, most lenders charge high interest rates on personal loans, especially those for people with a low credit score.

Using an unsecured personal loan to consolidate debt may cost more than continuing regular payments on your existing credit cards.

Alternatives to Consolidation Loans

Debt settlement is a debt consolidation strategy where you enroll your accounts with a debt settlement company. You stop making payments on the enrolled accounts and instead, make payments into a special bank account. Over time, the debt settlement company negotiates with creditors to reach lump-sum settlements for debts.

The advantages of debt settlement are a relatively short time to debt freedom. Also, the monthly payments can be lower than monthly minimum payments for enrolled credit cards, and are always lower than credit counseling. The disadvantages are calls from creditors to encourage the consumer to resume payments and leave the debt settlement program. Also,typ your credit score is damaged during the program.

Credit counseling is a process where you meet with a counselor to create a household budget. The counselor creates a debt management plan that divides your monthly payment among your creditors. A typical debt management plan last 5 years, and has a high monthly cost. The advantage to credit counseling is creditors do not call you asking for payment. Also, credit counseling has the potential to cause less harm to your credit score. However, this varies.


A loan may not meet your needs. Consider credit counseling or debt settlement as alternatives to consolidating your credit cards into one monthly payment.

Dealing with debt

If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2022 was $16.91 trillion. Student loan debt was $1.60 trillion and credit card debt was $0.99 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Each state has its rate of delinquency and share of debts in collections. For example, in Washington credit card delinquency rate was 2%, and the median credit card debt was $439.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.

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DDonna, Jan, 2020

Went thru a divorce last year and moved in with my mom trying to get back on my feet. I have approx. $5000 in credit card and medical bill debt. My credit score is low and I'id like to find someone that will pay off my debt  so I can make monthly payments.I'd like to get my credit back in good standing. Is there anyone that can help me?

DDaniel Cohen, Jan, 2020

Donna, if your credit score is poor then a loan that consolidates your debt is not a realistic option. I think that speaking with a Credit Counseling Service is a good first step. Take advantage of their free budgeting review. You may not have enough debt to qualify for a Debt Management Plan, but if you do they will explain how that works. 

For medical debt, which is not accepted by most credit counselors, here are a few quick tips:

1. Review your bills to make sure they are correct. 2. Make sure that your medical insurance provider covered what it should (if you have insurance). 3. Reach out to the provider to see if they have any kind of hardship program. Many will allow payments and not charge interest.