If your credit card balances have been creeping up lately, you’re not alone. Americans now carry record-high revolving debt — nearly $8,000 per cardholder on average — with interest rates around 22%. That’s a painful combo when everyday costs are still high. It’s no wonder more people are eyeing debt consolidation as a way to get relief.
Consolidating your debt can be a smart money move. By rolling multiple balances into one payment — often at a lower rate — you can save big on interest and pay off what you owe faster. But don’t rush in blindly. Here are three key things to know before you make your move this month:
Personal loans aren’t the only option.
While personal loans are popular for consolidation, they’re not your only tool. Balance transfer credit cards can be powerful if you qualify for a 0% intro APR, giving you over a year (sometimes nearly two) to pay down balances interest-free. Be mindful of balance transfer fees and have a payoff plan in place before the promo ends. If your credit score isn’t strong, debt relief companies can help connect you with lenders who specialize in consolidation loans for borrowers with dings on their credit.
The savings can still add up.
With card APRs near 22% and personal loans averaging around 12% for those with good credit, transferring balances can significantly reduce costs. Tapping home equity is another option — rates currently hover near 8%. However, your rate depends on your credit and income, so it’s best to run the numbers first.
Know what you can (and can’t) roll in.
Most consolidation covers unsecured debt, such as credit cards or medical bills, rather than car loans or mortgages. Plus, lenders cap how much you can borrow. So, total up your balances and check limits before you apply.
Debt consolidation can be a game-changer — but only if you pair it with better habits. Knock out debt, change spending patterns, and stay on track.
