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How to Choose the Best Credit Card Consolidation Loan

Ruchi Gupta - Author
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Aug. 1 2022, Published 5:52 a.m. ET

If you have multiple credit cards with high balances and you’re struggling to manage the payments, you may be thinking about debt consolidation. How do you choose the best credit card consolidation loan?

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Credit cards have become a necessity, and some businesses will accept only them for payments. Many credit cards also come with reward programs that can save you money on shopping. Sometimes, however, you may fall into credit card debt, and consolidation may be necessary.

How does credit card debt consolidation work?

In debt consolidation, you bundle multiple credit accounts into a single debt, meaning you'll have only one monthly payment to make. You may also have more time to repay the debt, which makes it a feasible debt management strategy.

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You can consolidate credit card debt in two ways: you can take out a personal loan and use the proceeds to pay off your card balances, or get a balance transfer credit card that merges your outstanding card balances into a single card.

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How to choose the best credit card consolidation plan

You need to pursue a debt consolidation plan that will offer the relief you need while safeguarding your credit score. Depending on your circumstances, consolidating credit card debts through a personal loan may be a better option. The most important factors to consider when choosing a strategy are the interest rates and loan amounts offered.

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What are the best credit card consolidation loan companies?

The best credit card consolidation plan should have a lower interest rate than you’re currently paying and cover the entire balance you want to consolidate. The plan should also give you ample time to repay the new loan. Some of the best credit card consolidation loan providers are the following:

  • Upgrade, which offers loans of $1,000–$50,000 and accepts a credit score of at least 560. It charges interest rates of 6 to 36 percent, and gives you up to five years to repay the loan. You can reduce or pause payments if you run into financial hardship.
  • Upstart, which also has a financial hardship program lets you consolidate loans of $1,000–$50,000 at interest rates of 5 to 36 percent. It has no specific credit score requirement and you may have up to five years to repay the loan.
  • SoFi, which lets you consolidate debt of $5,000–$100,000 at interest rates of 6 to 22 percent. It requires a credit score of at least 680 and the repayment period is up to seven years. SoFi also offers stock and crypto trading services.
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