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Credit card debt

Consolidating credit card debt. Is it a good idea?

Credit card consolidation is when you combine all your credit card debt into a single loan or credit card. It can be helpful to manage payments easier, but it does involve taking out more credit. Be informed about the risks before going choosing this option. There may be other ways to feel in better control of your payments.

We recommend getting debt advice first. StepChange can help look at all the options available to you, to help you avoid further credit.

On this page


  1. Credit card consolidation loans
  2. Credit card balance transfers
  3. Common questions we are asked about consolidating credit card debt
  4. Find the best way to deal with credit card debt
  5. Useful links: Debt consolidation

How can I consolidate my credit card debt?

There are a couple of ways to consolidate credit card debt.


  • Take out a credit card consolidation loan
  • Do a credit card balance transfer

Credit card consolidation loans

What is it?

A consolidation loan is when you borrow money to pay off all your credit cards. Then you only have one debt (the loan) to manage and pay off.

How do I get a credit card consolidation loan?


  1. Add together your debts. Make a note of how much you owe, how much you agreed to pay back each month, and the interest rate. You can find this information on any recent statements you have
  2. Check for early repayment fees. This is only an issue for loans. Credit cards and overdrafts cannot charge early repayment fees. Check your loan statement to find out if you are at risk of early repayment fees. Or you can contact the lender directly to find out
  3. Compare different consolidation loans. Each lender will have different interest rates. Some will give you more flexibility with the repayment term than others. Many lenders will have a debt consolidation calculator on their website that will show you an estimate of how much you could borrow, and what repayments could look like. There are also some price comparison websites that can help compare loans for you
  4. Apply for the loan. Use the loan to pay off your other debts if your application is successful. Make sure you make your agreed payments every month on time

How to find the interest rate of your debts

You can find out the interest rate of your debts by checking your statements, or your lender's app. Look for any mention of the annual percentage rate (or APR for short). This will show as a percentage (%).

Credit card consolidation loan benefits


  • Moving all the money you owe into one loan is much easier to manage than several debts
  • With a better credit score, you could get a lower interest rate on the loan

Credit card consolidation loan risks


  • You will still have the same amount of debt to pay off, even though you have less payments to manage
  • You could end up paying more in interest because consolidation loans last a long time
  • A loan agreement cannot easily be changed to suit changing circumstances - even if you can afford the loan now, that could change over the term of the loan
  • Consolidation loans can be 'secured' or 'unsecured'. Secured loans are loans connected to items of value, like your home. It is very risky to take out a secured loan like this, as missed payments could lead to you losing your home. Find out more about secured debt consolidation loans

Credit card balance transfers

What is it?

A credit card balance transfer is when you combine all your credit cards into one with a low or 0% interest rate. Then you only have one credit card to manage and pay off.

A 0% interest rate means you don't pay interest on the balance (the amount you owe).

How do I do a credit card balance transfer?

The process of doing a balance transfer can be slightly different depending on the card provider. This is a general guide of how it works:


  1. When you have found a 0% credit card that meets your needs, you will first need to apply for it. Be aware that this will involve a check on your credit file which will affect your credit score
  2. Your new lender will pay the full amount of your old credit card and transfer it to your new 0% credit card
  3. You make monthly payments to your new credit card every month as you normally would

Benefits of a credit card balance transfer


  • A credit card with low or 0% interest means you can focus on paying off the credit card. There will be no interest to worry about
  • You may be able to combine several credit card balances onto one 0% credit card, meaning you will have fewer monthly payments to manage and less interest to pay

Risks of a credit card balance transfer


  • The 0% interest rate does not last forever. When it ends, the interest rate often jumps to a much higher amount. To keep the 0% interest rate, you will have to transfer to a new 0% credit card
  • You may have to pay a one-off fee for the balance transfer. The fee amount is usually based on a percentage (%) of your balance up to 5%. So, if you transferred £1,000 with a 5% fee, you would pay £50 in fees
  • The lender can cancel the 0% offer if you miss payments
  • The lender could set a time limit for you to complete the transfer to get the 0% offer. This can be up to 90 days. You do not get the 0% offer if you miss this window of time
  • Your old accounts will not close on their own. You will need to cancel the cards you have transferred the balance of

Unsure if you need help with credit card debt?

We can help you work it out. All you need to do is take five minutes to answer ten questions.

Take the quiz

Common questions we are asked about consolidating credit card debt

You can use comparison websites.

The main things you should be comparing include:


  • Interest rate: This is the annual percentage rate (APR) and shown as a percentage (%). The lower the percentage, the less you will pay in interest
  • Loan term: This is the amount of time you repay the loan in. It can take several years. A longer term usually means lower monthly payments. But you will be making payments for longer period of time
  • Fees: Check if the lender charges setup fees for the debt consolidation loan. Also look out for any early repayment fees the people you owe might charge for any existing debts you have

A consolidation loan means you only manage a single debt repayment, instead of several. This can make it easier to budget.

It sounds simple, but there are hidden risks that could make your situation worse, including:


  • Paying more in interest over a long period of time
  • Not being able to change your payments if your situation changes

The way you deal with debt should make your life easier. This is why we always encourage getting debt advice first.

Credit card consolidation and debt management may seem like similar things, but they work very different:


  • Credit card consolidation is when you take out new credit to pay off your other credit cards
  • Debt management is when you, or a debt management provider, agree affordable payments with the people you owe. Sometimes the debt can even be written off

Debt management could be in the form of a repayment solution or an insolvency solution.

Repayment solutions work a bit like debt consolidation. You make a single payment to a debt management provider, such as StepChange. The provider fairly shares your monthly payment with each of the people you owe. The main difference is you do not have to take out any further credit.

Repayment solutions include:


Insolvency solutions allow you to write off debt you cannot afford to pay back. Some of them involve making payments to your debts for a set amount of time, and any remaining debt is written off at the end. Others do not need you to make payments before the write off happens.

These types of debt solutions are legally binding and can have an impact on several areas of your life. You must get debt advice to make sure they are right for you.

Insolvency solutions in England, Wales, and Northern Ireland include:


Insolvency solutions in Scotland include:


Find the best way to deal with credit card debt

StepChange is a free debt advice provider. We can help you if you are finding it hard to manage credit card debt and will not judge you or your situation.

Get started with online debt advice at any time that suits you. Online advice gives you the freedom to save your progress, pause when you need to and complete the session at your own pace. Our friendly advisors are on hand to support you if you get stuck in the process.

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