5 best debt consolidation options of 2025
Updated . This date may not reflect recent changes in individual terms.
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Our top debt consolidation picks
How we picked: We compared interest rates, fees, qualification requirements, repayment terms, and customer support quality.
Best personal loan: SoFi
Why it stands out: SoFi offers competitive rates for debt consolidation loans with no fees and member benefits like career coaching and financial planning. Strong option for borrowers with good credit.
- No fees: No origination, prepayment, or late fees.
- Competitive rates: APRs typically range from 8.99% to 29.99% for qualified borrowers.
- Member perks: Access to financial advisors, career services, and exclusive events.
- Loan amounts: $5,000 to $100,000 with 2-7 year terms.
- Credit requirements: Good to excellent credit typically required (670+ FICO score).
Best balance transfer card: Citi Simplicity Card
Why it stands out: Offers one of the longest 0% intro APR periods for balance transfers, giving you extended time to pay down debt without interest charges.
- Long intro period: 0% intro APR on balance transfers for 21 months.
- No late fees: Never charges late fees, though payments are still due.
- Simple structure: No annual fee and straightforward terms.
- Transfer fee: 5% of transferred amount or $5 minimum.
- Credit requirements: Good to excellent credit needed for approval.
Best for bad credit: Avant
Why it stands out: Accepts borrowers with fair credit and focuses on helping people consolidate high-interest debt. Offers prequalification without affecting credit scores.
- Credit flexibility: Accepts credit scores as low as 580.
- Quick funding: Funds as fast as next business day after approval.
- Soft credit check: Prequalify without impacting your credit score.
- Loan amounts: $2,000 to $35,000 with 2-5 year terms.
- APR range: 9.95% to 35.99%, higher than prime lenders but lower than credit cards.
Best debt management: InCharge Debt Solutions
Why it stands out: Nonprofit credit counseling agency offering debt management plans that can reduce interest rates and eliminate fees through negotiations with creditors.
- Nonprofit status: HUD-approved counseling agency focused on consumer education.
- Reduced rates: Often negotiates lower interest rates and waived fees with creditors.
- Single payment: Consolidates multiple payments into one monthly amount.
- No new debt: Doesn't require taking on additional loans or credit.
- Education focus: Includes financial counseling and budgeting assistance.
Best home equity option: Figure Home Equity Line
Why it stands out: Uses home equity to access lower interest rates for debt consolidation. Fully digital application process with fast approval and funding.
- Low rates: Home-secured rates typically much lower than unsecured options.
- Large amounts: Access up to 80% of home equity, often $15,000-$400,000+.
- Fast process: Digital application with approval decisions in minutes.
- Flexible draw period: Access funds as needed during 10-year draw period.
- Important risk: Your home serves as collateral and could be at risk if you default.
Important Warning: Home equity products put your home at risk. If you cannot make payments, you could lose your house. Only consider this option if you're confident in your ability to repay and have a stable income.
How we picked these debt consolidation options
We evaluated dozens of debt consolidation methods across multiple categories: interest rates, fees, qualification requirements, loan amounts, repayment terms, customer service quality, and specific benefits for debt consolidation purposes.
What you should know about debt consolidation
Debt consolidation combines multiple debts into a single payment, ideally at a lower interest rate. The goal is to simplify payments and reduce the total cost of debt, but success depends on choosing the right method and maintaining good financial habits.
Main consolidation methods
- Personal loans: Fixed rates and terms, predictable payments.
- Balance transfer cards: 0% intro periods but require discipline to pay off.
- Home equity loans/lines: Lower rates but your home is collateral.
- Debt management plans: Work with creditors to reduce rates without new loans.
Debt consolidation terms to compare
Interest rates & APR
Compare the weighted average rate of your current debts to consolidation options. Factor in intro rates that may increase over time.
Fees to watch
- Origination fees: Often 1%-8% of loan amount for personal loans.
- Balance transfer fees: Typically 3%-5% of transferred amount.
- Closing costs: Can be $2,000-$5,000+ for home equity products.
- Monthly maintenance: Some debt management plans charge monthly fees.
Repayment terms
Longer terms mean lower payments but more interest over time. Consider total cost, not just monthly payment amount.
Credit impact
Hard inquiries may temporarily lower scores, but successful consolidation can improve credit utilization and payment history.
Tips for successful debt consolidation
- Calculate total costs: Include all fees and interest over the full repayment period.
- Address spending habits: Consolidation won't help if you continue accumulating new debt.
- Keep old accounts open: Don't close paid-off credit cards as it can hurt your credit score.
- Make extra payments: Pay more than the minimum to reduce total interest costs.
- Emergency fund: Build savings to avoid relying on credit for unexpected expenses.
Debt consolidation red flags
- Companies requiring upfront fees before providing services.
- Guarantees to eliminate debt or stop all collections immediately.
- Pressure to sign up immediately without time to review terms.
- Promises that seem too good to be true or unrealistic timelines.
- Companies that aren't transparent about fees, risks, or credit impact.
- Debt settlement companies that tell you to stop paying creditors.
Types of debt consolidation explained
Personal loans
Take out a new loan to pay off existing debts. Fixed monthly payments and clear payoff timeline. Best for those with good credit who want predictability.
Balance transfer credit cards
Move high-interest credit card debt to a card with 0% intro APR. Requires discipline to pay off before promotional rate ends. Best for manageable amounts of credit card debt.
Home equity loans/lines of credit
Use your home's equity to secure lower-interest financing. Significant risk as your home becomes collateral. Best for homeowners with substantial equity and stable income.
Debt management plans
Work with nonprofit counselors who negotiate with creditors for better terms. No new loans required. Best for those who want professional guidance and creditor negotiations.
Cash-out refinancing
Refinance your mortgage for more than you owe and use extra cash for debt payoff. Only makes sense if mortgage rates are favorable and you have significant equity.
When debt consolidation makes sense
- High-interest debt: You have credit cards or other debt above 15-20% APR.
- Multiple payments: Managing several different due dates and minimum payments.
- Good credit: You qualify for rates lower than your current debt.
- Stable income: You can commit to consistent payments over the repayment period.
- Spending control: You've addressed the underlying spending habits that created the debt.
Questions about debt consolidation
- Will debt consolidation hurt my credit score?
- Initially, hard credit inquiries may cause a small, temporary dip. Long-term, consolidation can help by reducing credit utilization and simplifying payments, potentially improving your score.
- How much debt can I consolidate?
- This depends on your income, credit score, and chosen method. Personal loans typically range from $1,000-$100,000, while home equity options can be much higher based on your home's value.
- Should I consolidate all my debt or just credit cards?
- Focus on high-interest debt first. Student loans and mortgages often have lower rates and tax benefits, so they may not be worth consolidating.
- What's better: debt consolidation or debt settlement?
- Consolidation maintains your credit and pays debts in full, while settlement involves negotiating to pay less than owed and severely damages credit. Consolidation is generally the better option if you qualify.
- How long does debt consolidation take?
- Personal loans and balance transfers can often be completed within 1-2 weeks. Home equity products may take 30-45 days. Debt management plans can take several weeks to negotiate with all creditors.
- Can I consolidate debt with bad credit?
- Yes, but options are more limited and expensive. Consider nonprofit debt management plans, secured loans, or working on improving your credit before consolidating.
- What happens to my credit cards after consolidation?
- Keep them open but avoid using them. Closing accounts can hurt your credit score by reducing available credit and shortening your credit history.
Important information: Annual Percentage Rates (APRs), terms and payment estimates are based on your credit profile and publicly available lender information at the time of comparison. Lenders typically offer APR ranges, with the lowest rates reserved for the most qualified borrowers. Your actual APR depends on factors reviewed at application, including credit score, income, debt-to-income ratio, and loan amount. All loans and credit products are subject to credit review and approval.
Debt Consolidation Risks: Consolidation is not right for everyone. Home equity products put your home at risk. Success requires addressing underlying spending habits and maintaining discipline to avoid accumulating new debt. Consider speaking with a nonprofit credit counselor before making decisions.
