Best Credit Card Consolidation Loans - 2021 Picks
Credit card debt consolidation is a smart choice if you want to pay off your credit card balances faster and with lower interest rates. It’s an excellent strategy to improve your credit score as well as your financial life.
Although many lenders offer personal loans to cover credit card debts, not all of the loans have good terms. We’ve created a list of the best credit card consolidation loans and reviewed them thoroughly. You can choose from our recommended lenders with confidence.
4 Best Credit Consolidation Loan Options
If you are looking for a personal loan for debt consolidation, Payoff may be perfect for you. This reputable company offers personal loans to consolidate debts of all kinds. The company’s loans go up to $40,000 with long repayment schedules. The company doesn’t charge any fees aside from the origination fee. Read Review
- •No application fees or late payments fees
- •Increase your credit score by up to 40 points
- •Soft credit inquiry
Upgrade is the best debt consolidation provider for borrowers who have an excellent credit score. Thanks to its straightforward application process, almost instant funding, and flexible payment terms, Upgrade is applauded by numerous clients across the US. It offers many beneficial features, like paying creditors directly and checking your rates without affecting your credit score. Moreover, you can apply for a joint loan and qualify for more affordable loan terms. Read Review
- •Co-signed credit card consolidation loans
- •Quick funding
- •Direct payments to creditors
The next on our list of the best debt consolidation loan companies is Avant. Founded in 2012, Avant is a Chicago-based online lender that offers unsecured and secured personal loans for borrowers with a low credit score. Customers praise its uncomplicated application process, functional mobile app, as well as option to change payment days. However, its interest rates can be too high, and the company also offers long term loans. Read Review
- •Loan-tracking mobile app
- •Soft inquiry during the pre-application process
- •Flexible repayment terms
Marcus is one of the best consolidation loan companies offering unsecured personal loans with fixed monthly rates. The lender has one of the lowest APR in the industry, which is why so many clients use its services. It also offers loans with flexible repayment terms. Moreover, this is one of the rare providers that provide loans without the origination fee or other fees. Read Review
- •Smooth application process
- •Excellent mobile app
- •Flexible loan terms
Our Criteria for Evaluating the Best Credit Card Consolidation Loans
Credit card debt consolidation loans are personal loans that let you pay off your credit card balances all at once. It means you have one bill to pay every month instead of several. Because the loans generally have lower interest rates, there’s a good chance the monthly payment will be less than you were paying. Getting your credit card balances down to zero all at once is good for your credit score too.
To find the best possible solution for your budget, we chose only reputable lenders and compared them based on the following criteria:
Credit card consolidation companies differ based on the minimum and maximum limits of the loans they make. It’s important to pick a lender whose loans will cover the total outstanding balance on your credit cards. Before you choose a lender, see how much you owe on your cards.
Although some lenders let you borrow more than your outstanding debt, it’s better for your financial health and your credit rating if you borrow only the amount you need to pay off your cards.
Interest Rates and Payments
It is the interest rate that determines the size of your monthly payments. Lenders generally offer lower loan consolidation rates than the interest you’re currently paying on your credit card balances. The best debt consolidation loan for you is the one with the lowest APR. Most borrowers find the payments smaller than the combined minimum payments they were making to credit card companies.
Most lenders charge an origination fee at the beginning of the loan’s term. Lenders generally let you add it to the amount you are borrowing so you don’t need to come up with the cash. You should include the origination fee in your calculations as you decide how much you need to borrow.
In addition to origination fees, some lenders charge administration fees, fees for late payments, and fees for paying off the loan early.
We prefer an easy, fast application process. When a candidate for the best debt consolidation company reviews your loan application, it should quickly send you one or more loan offers. The best providers may make a “soft” credit inquiry, which doesn’t affect your credit score, when deciding which loans to offer you.
In most cases, borrowed funds arrive in your bank account one business day after your loan is approved, but with some lenders, you might need to wait for a couple of days.
It is better to pay off your loan quickly, but the shorter the term, the higher the monthly payments. The best repayment schedule is the fastest one you can afford. To ensure that you have plenty of options, you should choose personal debt consolidation loans whose providers offer flexible repayment terms. In most cases, loan terms can be as short as two years or as long as six.
Mobile apps, an auto-pay option, and changeable payment dates are available with some lenders. They’re not the most important factors in picking a loan, but if you’ve narrowed the list to two, these factors could make a difference.
It’s always smart to see what borrowers say about lenders. You can find lots of reviews at Trustpilot or the Better Business Bureau website. Borrower feedback can help you discover which lender offers the best loan for debt consolidation.
Credit Consolidation Loans: Detailed Reviews
Founded in 2009, Payoff is a California-based lender marketplace that helps match qualified borrowers with lenders that specialize in personal loans for debt consolidation. Payoff doesn’t make loans directly to borrowers, but its services can help you find and secure the best loan at the most favorable terms.
The company says its services have helped thousands of borrowers get out of debt and improve their credit score by an average of 40 points. In our opinion, this makes it one of the best credit card debt consolidation companies on the market. The company is accredited by BBB, which gives it an A+ rating.
Types of Financing
The first thing you should know is that Payoff isn’t a direct lender. Payoff collaborates with First Electronic Bank, First Tech Federal Credit Union, Alliant Credit Union, Teachers Federal Credit Union, and Technology Credit Union. It is these companies that fund your loan.
However, the money will be transferred from Payoff to your account, so the loan you get is a loan from Payoff.
Unlike other lenders, Payoff offers loans only for credit card debt consolidation. These loans are unsecured, meaning that you don’t need to provide collateral to qualify.
Getting a personal loan for credit card debt at Payoff starts with an online form on the company’s website. It requires personal information like your name, address, and Social Security number. The company will also check your credit score, but don’t worry. At this stage of the application, Payoff makes only a “soft” inquiry that will not affect your credit score.
Payoff is well known for its low credit score requirements. You can secure a Payoff debt consolidation loan with a minimum credit score of 640.
In addition to checking your credit score, the company will also ask you about your monthly income. To qualify for credit card consolidation loans, Payoff requires a debt-to-income ratio of 50% or less. It means that the total of your monthly debt payments must be less than half of your monthly gross income.
Payoff credit card consolidation loans are available for US citizens except for residents of Massachusetts, Mississippi, Nevada, and Nebraska.
Payoff is an excellent solution for borrowers who need a significant amount of money to cover their debts. Payoff personal loans range from $5,000 to $40,000. If your credit score is good enough, you can qualify for the company’s most competitive debt consolidation loan rates.
The APR can be as low as 5.99%, which is a better deal than you’ll find at most of Payoff’s competitors. The maximum APR is 24.99%.
To cover administrative costs, many lenders charge an origination fee, which is typically rolled into the loan. For example, if you need to borrow $10,000 to pay off your credit debt, the lender might make you a loan of $10,200 and deduct a 2% origination fee. Payoff origination fees range from 0% to 5% depending on your credit score, loan amount, and other factors.
Credit card debt consolidation loans can have long or short repayment schedules. At Payoff, the minimum term is two years and the maximum is five years.
Payoff doesn’t charge application fees, monthly administration fees, or even late payment fees. You should still make your payments on time, however. Late payments are reported to credit bureaus and they can reduce your credit score.
If you have a good credit score and high credit card debts, you are likely to find that Payoff offers the market’s best personal loans for debt consolidation. The company has a competitive APR, and although it does charge an origination fee, there are no other fees to worry about. Customers praise the lender’s pre-qualification process, during which you can check your rates without affecting your credit score.
Reasons to Apply:
- No application fee
- Increase your credit score by up to 40 points
- No late payment fees
- Long repayment terms
The next lender on our list of the best credit card debt consolidation loans is Upgrade, a San Francisco-based company that offers debt consolidation loans for borrowers with average or excellent credit scores.
The lender has been around for a decade. In 2017 it started focusing on online and mobile banking systems that allow them to reduce fees on everyday transactions. More than 10 million clients have secured personal loans and lines of credit from Upgrade over the past three years.
In addition to loans, Upgrade offers credit monitoring and educational support tools for clients who want to improve their finances.
Types of Financing
Upgrade offers two types of financial products: personal loans and lines of credit. Both have served as foundations for clients’ best debt consolidation programs. Upgrade is a direct lender, and its loans are available for borrowers who have good credit scores. The lender offers an option to disburse funds directly to creditors.
Regardless of how many credit or debit cards you need to pay off, you can erase your balances directly through the Upgrade platform - and you’ll also get great discounts.
Another good thing about Upgrade credit card debt consolidation loans is that you can apply for a loan with a co-signer. A co-signer signs for a loan and can help you get the loan amount you want. Only the top debt consolidation companies allow this option. A co-signer can also help you get better loan terms and more affordable rates. For lenders, it’s an extra guarantee that you’ll be able to pay off the loan.
Upgrade is an online lender, so if you want to get a personal loan to consolidate debt, you need to apply through the website. Even if you never applied for a loan online before, you’ll find filling out the application a smooth, fast process.
Before you apply for a loan and allow the lender to make a “hard” credit inquiry, you should confirm that Upgrade is the best debt consolidation company for you. Once you arrive at the website, you’ll see boxes where you can type the loan amount you need and select the loan purpose.
This is a pre-qualifying stage of the application process. During this phase, the lender will make only a soft credit pull, which won’t affect your credit score.
As soon as your loan is approved, you can expect money in your account within one business day.
At Upgrade, you can apply for loans that range from $1,000 to $50,000. One of the disadvantages of this lender is that its consolidation loans require a credit score of 620 or higher, which many people lack. It’s also not the best credit card debt consolidation option for borrowers seeking competitive rates. The APR ranges from 7.99% to 35.97%.
Upgrade loans also include many fees. The origination fee ranges from 2.9% to 8%, which is much more than other lenders charge. Upgrade also charges a $10 fee for late payments. However, the company allows you to choose your due date to fit your monthly cash-flow patterns, so you can avoid penalties. It also offers long-term loans: You can choose a three-year or five-year repayment period.
Despite the high APR and fees, we consider Upgrade one of the lending industry’s best loan consolidation companies. The company allows you to choose your payment date and it encourages you to check your interest rate, maximum loan amount, and other details before you apply for a loan.
It also offers some other benefits, like the co-signer option, which could help you qualify for better terms. You can get a discount by allowing Upgrade to send funds directly to your creditors. However, the top APR of 35.97% means this lender is not suitable for borrowers with low credit scores.
Reasons to Apply:
- Smooth application procedure
- Schedule payment dates to fit your needs
- Check rates with a “soft” credit inquiry
- Lower APR for borrowers with good credit
Avant is among the best debt consolidation companies in the US for borrowers who have low credit scores. This reputable Chicago-based operator has provided more than $6.5 billion in funding to more than 800,000 borrowers since it was founded in 2012. Avant is focused on providing financial products for middle-income clients, allowing them to apply for various types of loans despite imperfect credit scores.
The BBB awards this lender an A rating, while Trustpilot gives it 4.5 stars of 5. Borrowers praise the lender’s financial products, helpful customer service staff, and excellent mobile app.
Types of Financing
Avant is well known for its secured and unsecured loans, including the best consolidation loans and loans for relocation, car repairs, home renovation, and other purposes. For credit card consolidation, Avant allows you to borrow a lump sum to cover the debts on all your credit cards, leaving you with a single monthly payment to make.
You can also sign up for an auto-pay option so you’ll make your payments on time. We think this is a great option. Regular payments are little miracles when it comes to improving your credit score.
Like other debt consolidation companies, Avant allows you to apply for a loan through its website. Just type your personal details, the desired loan amount, and the loan purpose into a form at the website. The lender will then check your credit score. Don’t worry; at this stage, Avant makes only a soft inquiry that won’t affect your credit score.
After you complete the pre-application procedure, Avant sends you loan offers. You are not obliged to accept any of them. The company will not charge you anything for this service.
If you decide to take out a loan, you need to create an Avant account and verify your personal information first. Avant works like other lenders - before approving your debt consolidation loan, it reviews your personal details, Social Security number, address, and so on. The lender also inquires about your salary and other types of income such as child support and alimony.
Once your loan is approved, the funds will be in your account within one business day. You can use the Avant mobile app to check your account’s status, track payments, and manage your account.
Avant loans come with a high APR - as high as 35.99% if you have a low credit score. Even if you have a perfect credit score, the minimum APR is 9.95%, which we consider too high for this sort of loan.
Avant debt consolidation loan interest rates aren’t the end of the bad news. The company also charges a high original fee: 4.75% of your loan amount. Each late payment will cost you $25.
Avant credit card consolidation loans start at $2,000. The maximum is low compared to what you can get from other lenders: $35,000.
With long repayment terms, late fees, and high interest rates, Avant is not the best option for everyone. Borrowers with a low credit score could find it the best loan consolidation option, regardless of how high the monthly payments are. But if you can meet the qualifications for a debt consolidation loan from one of the other vendors on our list, you will probably save money.
Reasons to Apply:
- Mobile app for tracking your loan
- Simple online application
- Fast funding
- Flexible repayment
Marcus by Goldman Sachs Review
Launched in 2016, Marcus is an online platform owned by US investment bank Goldman Sachs. Marcus offers three financial products - certificates of deposit, online savings accounts, and personal loans.
When it comes to debt consolidation loans, reviews of Marcus at BBB and Trustpilot are mixed. Some borrowers voice dissatisfaction with the company’s customer service staff, while others praise the savings accounts and overall banking experience. Marcus has an A+ BBB rating, and in 2019 it took first place in J.D. Power’s personal loan customer satisfaction study with a score of 899.
Types of Financing
Marcus is best known for its high-yield personal savings accounts, but this online bank also offers unsecured personal loans for debt consolidation. Clients’ debt consolidation reviews attest that Marcus is a good choice for borrowers who have an excellent or good credit score.
If you decide to use a personal loan to consolidate credit card debt with this lender, be sure to check your credit score first. Marcus personal loans are for borrowers who have accrued a good credit history, so if your credit score is blemished, you’ll probably have difficulties qualifying for a loan.
One benefit of working with Marcus is that the lender pays your creditors directly. You won’t have to worry about making multiple payments every month: just the one payment to Marcus.
Another benefit: You can check your credit card consolidation loan rates and manage your loan with the lender’s mobile app. And you can set up auto-pay if you’d like.
Marcus offers only unsecured personal loans. The lender doesn’t provide co-signed or secured loans.
If you want to apply for a Marcus personal loan, you can fill out forms on the website or telephone the company, where a sales consultant will take your information and step you through the process. Marcus makes loans in all 50 states, Puerto Rico, and Washington, DC.
Applicants must meet lender requirements that vary from state to state.
Before you apply for a loan, Marcus will check your credit with a “soft” inquiry that won’t jeopardize your credit score.
Like other debt consolidation loan companies we have reviewed, Marcus will ask for personal information. After verification, the lender sends a loan offer.
Marcus says it sends the money to your account within four days after your loan is approved.
Marcus loan rates are fixed, which means the APR you sign up for won’t change during the life of the loan. Compared to other lenders on our list, Marcus has an excellent APR. If you have a good credit history, you can qualify for a loan with an interest rate as low as 6.99%. The highest APR is 23.99%, which is still less than you’ll pay for loans from some other lenders.
Marcus offers its best credit card consolidation loan rates to borrowers who use the auto-pay option. This is a good strategy for reducing your APR by 0.25%.
You won’t be surprised by additional fees when you sign up for a loan with Marcus. There are no origination fees or prepayment fees. If you make 12 consecutive monthly payments on time, you’ll get a reward: You can skip a month. Your loan’s term will be extended by one month, but you won’t pay any extra.
Marcus makes loans of $3,500 to $40,000, but the amount you qualify to borrow depends on your credit score, payment history, and other factors.
Marcus makes some of the best credit card consolidation loans in the industry. The lender is a terrific partner for those who have good or excellent credit scores. However, borrowers with fair credit can also qualify and get affordable rates.
Reasons to Apply:
- Excellent mobile app
- Competitive rates
- Flexible loan terms
- Smooth application process
Why a Credit Card Debt Consolidation Loan Makes Sense
If you have high credit card balances that you carry from month to month, you should consider credit card debt consolidation. There are many ways to consolidate your debt. A personal loan is one of the most popular and cost-effective.
Most online lenders make these kinds of loans, either as separately advertised financial products or as normal personal loans. The process for applying for a loan to pay off credit cards is the same as applying for any other financial product. A lender reviews your personal details, credit score, and credit history, then creates an offer that makes you forget all about the best debt consolidation credit cards you were about to apply for.
To make the most of this loan consolidation option, you need to have a good credit score. That might be challenging, especially if your credit score has been compromised by the same factors that have left you swimming in high-interest debt. But even with a bad credit score, you can qualify for a loan that pays off your debt immediately and reduces your monthly payments.
Although it might be difficult to find a lender, we still think that this is the best way to consolidate debt, and here is why:
- Fast and easy: The best credit card debt consolidation loans help you consolidate credit card debt quickly. The high-interest credit card payments are gone and you can focus on a fresh start with a single low monthly payment. When you’re swamped with credit card debt, a consolidation loan is like a fresh start.
- Save money: A credit consolidation loan saves you money too. Instead of paying sky-high interest rates to credit card companies, you pay a much more reasonable sum to a single lender who charges a reasonable rate and spreads out payments over time. The better your credit, the lower the interest rate and the more money you’ll save.
- Improve your credit: If you’ve had credit struggles, you can still qualify for some of the best debt consolidation loans for bad credit borrowers. Once you get a loan and start making payments on time, your credit score will start to rise as well.
No. On the contrary, a debt consolidation loan can help you improve your credit score by paying off your credit card debt and replacing it with a single low monthly payment. Make those payments regularly and your score will gradually rise.
Any personal loan you use to pay off your credit card debts is good, but no loan is the best for every borrower. Our list of the best loans to pay off credit cards includes providers that offer affordable rates, a range of borrowing limits, and a variety of repayment terms.
Consolidations give you a fresh start and help you preserve your credit rating. The danger is that once you’ve consolidated your debt and paid it off with a loan, your pockets are bulging with credit cards that have $0 balances. Temptation can induce you to get yourself in over your head again. You must make and keep a promise to yourself about using your credit cards strategically and paying off the balance every month.
If you find it difficult to make all your monthly credit card minimum payments, you should consider a personal loan like the loans we’ve described in this article. Many lenders offer these loans, and this article not only highlights some of our favorites but also gives you a reliable method for identifying the best credit card consolidation loans.
Financial information such as taking out a loan stays on your credit history for seven years.