Is Credit Card Debt Consolidation a Good Idea?

Natalia Brown Reviewed by Timi Joy Jorgensen, PhD

If you’re struggling with credit card debt, you aren’t alone.

Research shows that most Americans have some form of credit card debt:

55% are carrying credit card balances from month to month
15% have been in credit card debt for at least 15 years
45% have taken on more credit card debt since the pandemic
Nearly 25% believe it will take more than 2 years to pay off their credit card debt

Debt consolidation has helped many Americans pay off their credit card debt for good. So, is credit card debt consolidation a good idea for you? By taking a closer look at how it works, you can start your journey toward financial independence.

What Is Credit Card Debt Consolidation?

Credit card debt consolidation involves taking out a consolidation loan to pay off some or all of your credit cards. This makes it easier to manage your debt and allows you to pay it off faster.

In some cases, a debt consolidation loan is part of a plan that includes debt settlement. With debt resolution, an expert negotiates with creditors on your behalf so you only pay a fraction of what you owe. When you combine this with a debt consolidation loan, you can use the loan to pay for the reduced amount.

Is Credit Card Debt Consolidation a Good Idea for You?

Credit card consolidation can be the perfect solution for many borrowers who are struggling to make payments. But is credit card debt consolidation a good idea for you? Consider the pros and cons:

Pros

Pay less interest: Consolidation loans typically offer a much lower interest rate than you’re paying on your credit cards. This means your monthly payments will be lower and you’ll pay significantly less interest over time. Let’s take a look at what can happen if you try to pay off a balance within two years:

Make a single monthly payment: You don’t have to juggle multiple accounts or worry about what to pay off first. Instead, you just make one monthly payment. This can lift the emotional burden of managing your debt and make the process less overwhelming.

Pay off debt faster: Paying less interest means you can become debt-free faster and for less money. If you apply the money you saved on interest to the principle, you can cut months or even years off your repayment time. And when credit card debt consolidation is combined with debt settlement, you’ll be on your way to financial independence even sooner.

Build credit sooner: When people ask, “Is debt consolidation a good idea?” they’re often wondering how debt consolidation will impact their credit score. While debt consolidation may cause a temporary dip in your credit score—especially if combined with debt settlement—it is often the best choice in the long run. Making consistent, on-time loan payments means you will likely see a positive impact on your credit score even before the repayment term is over.

Cons

Missed payments could exacerbate financial problems: Consolidation loans usually come with fees that could stack up if you miss payments. Missed and late payments are reported to the credit bureaus.

You may not qualify: If your credit score is low, you may not qualify for a consolidation loan. If you do qualify for the loan, a low credit score means you may not qualify for the lowest rates.

Find the Right Debt Relief Program

If you’re wondering, “Is credit card debt consolidation a good idea?”, understanding the basics of consolidation is essential to making the right decision. But truly realizing the benefits of consolidation depends on choosing the right debt relief program.

Since 2009, National Debt Relief has helped over 450,000 Americans pay off their debt. We will work with you to create a customized consolidation plan and negotiate with your creditors so that you only pay a fraction of what you owe. With our guidance, you could get out from under the burden of debt sooner than you ever thought possible and get your life back.