With a debt consolidation loan, a lender issues a single personal loan that you use to pay off other debts, such as balances on high-interest credit cards.
However, a balance transfer card requires discipline to pay it off before the promotional rate expires, usually no more than 21 months.
The amount of credit card debt you can transfer is limited, typically no more than $15,000.
Debt consolidation loans allow borrowers to roll multiple old debts into a single new one, ideally at a lower interest rate.
Compare loans for debt consolidation and learn about your options for consolidating debt.
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Once the introductory period expires, the rate you’ll see on a balance transfer card is usually higher than on a personal loan.
You’ll also have to avoid the temptation of making further charges during that time. Fixed payments ensure that you’ll pay off debt on a set schedule.
The interest rate depends on your credit profile, and it usually doesn’t change during the life of the loan.
A debt consolidation loan is a good strategy if you: In this article, you can read about: Nerd Wallet’s top lenders for debt consolidation How to compare debt consolidation lenders How to consolidate debt successfully If your credit is good, you can apply for a 0% interest credit card and transfer your existing balances to it, which could save you money.
Consolidation works best when your ultimate goal is to become debt-free.