Is it smart to consolidate credit card debt?

When you’re juggling multiple credit cards and trying to keep up with minimum monthly payments, it can feel like you’re getting nowhere. That’s why many people consider consolidating their credit card debt — combining several balances into one payment with the potential for a lower interest rate and a clearer path forward. 

But is it smart to consolidate credit card debt? The answer depends on your situation, including your credit score, income and how much debt you’re carrying. Let’s take a closer look at how credit card debt consolidation works, the pros and cons, and what to consider before making your move. 

What does it mean to consolidate credit card debt? 

Debt consolidation combines multiple debts — especially high-interest debt from credit cards — into one new loan or repayment plan. That means instead of making several payments each month, you’ll make just one, often with a lower interest rate. That can help you pay off your debt faster and reduce the total amount you pay over time. 

There are several ways to consolidate credit card balances. Some people take out a personal loan or home equity loan to pay off their existing debt. Others use a balance transfer credit card or enroll in a debt management plan. Each method has different requirements, benefits and potential risks. 

At Empeople, we work with members to find solutions that make sense for their individual financial picture, including home equity loans and personal loans to consolidate credit card debt for people who qualify. 

Pros and cons of credit card debt consolidation 

Credit card debt consolidation isn’t right for everyone. Here are some of the pros and cons to help you decide. 

Pros: 

• One simple monthly payment to manage 
• May qualify for a lower interest rate, saving money over time 
• Could reduce your monthly payment or shorten your repayment term 
• Helps you feel more in control with a clear plan to pay off your debt 
• May help you build better money habits moving forward 

Cons: 

• You must qualify for most consolidation options, often based on income and credit 
• Some loans have prepayment penalties or fees 
• You may pay origination fees or balance transfer fees 
• Some loans require a minimum amount and some options still charge interest 

Before consolidating, calculate the total cost of repayment, including fees, to compare to your current payment plan. Use our credit card debt repayment calculator to estimate how long it will take to pay off your existing debt with your current interest rate, monthly payment and credit card balances. 

If your debt is relatively small or you’re close to paying it off, strategies like the snowball (tackling the smallest debt first) or avalanche (tackling the highest interest rate first) may make more sense — and cost less in fees. 

But if your repayment period is long and you have high-interest debt, consolidation might save you money and stress.  

Popular ways to consolidate credit card debt 

There are many methods to consolidate your existing debt and no one size fits all. Here are some of the most common ways people consolidate credit card debt with pros, cons and key considerations. 

Balance transfer credit card 

A balance transfer credit card allows you to move multiple credit card balances onto a single card, often with a low or 0% introductory interest rate. 

Pros: 

• Combines multiple debts into one 
• Introductory 0% interest rate offers a chance to pay down debt without accruing more interest 
• One monthly payment 

Cons: 

• Offers typically last 12 to 18 months; after that, the standard interest rate applies and it may be as high or higher than your current interest rates 
• May require a good credit score to qualify 
• Balance transfer fees often apply (typically 3-5% or a minimum dollar amount) 
• Risk of increasing your credit card debt if you continue using your credit cards 

Personal loan 

A personal loan is a fixed-amount loan you can use to pay off all your existing credit card debt, replacing it with one monthly payment at a potentially lower interest rate. 

Pros: 

• Fixed loan amount, fixed monthly payment 
• Lower interest rate than most credit cards 
• Predictable repayment schedule 

Cons: 

• May have origination fees 
• Your personal assets may be used to secure the loan  
• Approval and loan amount depend on your credit and income 
• Personal loans carry liability, which may put your personal assets at risk if you default on the loan 

Home equity loan or line of credit (HELOC) 

A home equity loan or HELOC allows you to borrow against the equity in your home, either through a lump-sum loan or a revolving credit line, to pay off credit card debt. 

Pros: 

• Ability to borrow against home value (often up to 90% of equity) 
• Fixed or flexible repayment options depending on loan type 
• Typically, lower interest rates than unsecured debt 

Cons: 

• Your home is collateral  
• Closing costs and appraisal fees may apply 
• HELOC interest rates can fluctuate and since HELOCs are still a line of credit, you may be tempted to use it as a credit card 

Debt management plan 

A debt management plan is a structured repayment plan set up through a credit counseling agency, which helps you consolidate your unsecured debts into one monthly payment. 

Pros: 

• One consolidated monthly payment 
• Potentially lower interest rate 
• Debt can be paid off in three to five years, typically 
• Flexibility to pay more each month if possible 

Cons: 

• All credit cards must be closed during the plan 
• No new credit can be opened during the term 
• May cause a temporary dip in your credit score 
• Some card issuers may not participate 
• May carry a set monthly fee or a fee amounting to a percentage of your monthly payment 

Debt settlement  

Debt settlement companies negotiate with your creditors to reduce the amount you owe, then help you set up a plan to repay a portion of the debt over time. 

Pros: 

• May reduce your total debt amount 

Cons: 

• Requires self-discipline to stick to a repayment plan 
• Forgiven debt may be taxable if over $600 
• Fees range from 15-25% of the total forgiven or enrolled debt 
• May hurt your credit score more than other options 

Debt settlement should be a last resort if you’ve exhausted other options. It’s not always successful and can carry long-term financial consequences. 

What to do after consolidating your credit card debt 

Consolidating credit card debt can give you a clean slate — but staying on track afterward is key to long-term success. 

• Don’t close all your cards right away. Keeping some accounts open helps maintain your available credit, which factors into your credit score. But consider storing them away so you’re not tempted to use them. 
• Boost your cash flow. Look for ways to free up extra income through part-time work or selling unused items. 
• Stick to a plan. Empeople Financial Guidance Experts can help you budget smarter and work with you to tackle high-interest debt. This one-on-one, personalized assistance is free for active members. If you’re just getting started, you can visit our Empeople Financial Success Center, a hub of custom–curated content you can explore on your own time, from wherever you are, 24/7. 

Regardless of how you consolidate credit card debt, the most important step is making a thoughtful decision based on your unique financial picture. There’s no shame in needing help — and no one-size-fits-all answer. With support, you can make a smart plan to pay off your debt and build the future you want.