Can I use a personal loan for credit card consolidation?

A credit card consolidation loan is a good idea if it reduces the cost of your debt and allows you to repay what you owe sooner than you would otherwise. Furthermore, a credit consolidation loan is the best choice if it will save you more than the top balance transfer credit cards... read full answer.

Credit card debt consolidation loans help put all your balances in one place. But they’re not worth it unless you also get a reduced interest rate relative to what you’re currently paying. Checking with a personal loan provider to see what rates you’re pre-qualified for should give you an idea of whether you’ll actually save money if approved.

If you can qualify for a balance transfer credit card that will accommodate all of your debt and provide a 0% introductory interest rate for 12+ months, that may be a better choice. That’s easier said than done, however, so it’s a good idea to keep your options open.

Credit card consolidation loans are a good idea when they:

1. Save you money on interest.
2. Help you get out of debt sooner.
3. Offer a better deal than balance transfer credit cards.

If you can’t find a credit card consolidation loan that will save you money, or qualify for any good balance transfer cards, there are a few alternatives to consider. A secured personal loan or home equity loan could get you lower rates, but at the risk of losing your property/home if you default. A loan from a friend or relative could get you low rates but could put stress on your relationship. Finally, other debt solutions like settling with your creditors may be helpful.

The best credit card consolidation loans for fair credit come from LightStream, a division of SunTrust Bank. LightStream’s credit card consolidation loans have a relatively low APR, ranging from a minimum of 5.99% to a maximum of 17.29%, depending on an applicant’s creditworthiness. Considering the average existing credit card account charges around ... read full answer14%, LightStream provides the potential to save a lot on interest. LightStream credit card consolidation loans require a credit score of 660+, according to third-party sources. That’s toward the lower end of the fair credit range, which starts at 640 and extends up to 699.

Most credit card consolidation loans are just personal loans marketed a bit differently. Personal loans let you use the funds for whatever you want, including paying credit card debt. People with fair credit have a chance of qualifying for most personal loans because lenders tend to require a credit score of at least 660. But if you only just meet the minimum requirements for approval, you can expect to receive an APR toward the upper end of the loan’s range. Depending on the loan, that might not be ideal for credit card consolidation. The goal is to get a lower APR than you’re currently paying on your credit card.

You’ll have better luck with credit card consolidation loans if you take steps to increase your credit score to the good range. There’s a helpful guide from WalletHub on how to improve your credit score.