Adam McCann, Financial Writer
@adam_mccann
Discover offers three good debt consolidation options: personal loans, home equity loans and credit cards. With Discover’s personal loans and home equity loans, the borrower receives a lump sum of money that they can use to pay off their existing debts, combining them into a single balance that accrues interest at a lower rate (hopefully). The main difference between the two is that personal loans are unsecured, while home equity loans are secured by the borrower’s house. Plus, Discover will pay off existing creditors directly with a personal loan.
The other way to pursue debt consolidation with Discover is to make a balance transfer to a credit card. The best credit cards for debt consolidation are ones that offer 0% introductory APRs on balance transfers. Below, you can see how all of Discover’s debt consolidation methods stack up against one another.
Discover Debt Consolidation Options Compared
Category |
Personal Loan |
Home Equity Loan |
Credit Card |
---|---|---|---|
APRs |
5.99% - 24.99% |
3.99% - 11.99% |
|
Dollar Amounts |
$2,500 - $35,000 |
$35,000 - $200,000 |
|
Payoff Timeline |
36, 48, 60, 72 or 84 months |
10 - 30 years |
Indefinite; has minimum monthly payment |
Credit Score Required |
660 |
620 |
|
Collateral |
None |
Your House |
None (except on the secured card) |
Time to Get |
8 - 11 business days |
10 business days or more |
5 business days or more |
Each of Discover’s debt consolidation options is best for a different group of people. Credit cards are best for people who can pay off the full amount within the card’s 0% introductory period. Personal loans are best for people who need larger amounts of money but still don’t want to provide collateral. And home equity loans are best for people who need above $35,000 in funding and have a home that they are willing to use as collateral.
The fact that Discover offers all three options puts them at an advantage compared to many other banks – in fact, only 5 of the top 10 banks by asset size offer all three.
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