Best debt consolidation loans in August 2026

Is now a good time to consolidate debt?

Timing matters little when it comes to debt consolidation — your financial profile matters the most, along with the rates on your existing debt. Rather than trying to time your loan application to the market, compare the rates you’re likely to get with your credit score against what you’re currently paying on your cards. 

Currently, the lowest available personal loan rate among Bankrate-featured lenders is just over 6% for borrowers with excellent credit. Even if your credit is poor, if a debt consolidation loan would still save you money after fees, it’s a good move. Plus, you can always replace a previous debt consolidation loan with a new loan if your scores improve significantly after you consolidate your high interest debt.  

A debt consolidation loan can help get you on track to a healthier wallet by helping repair low credit scores caused by taking on too much credit card debt. The key to keeping your score high after a debt consolidation loan is to plan your spending ahead of time. If the math isn’t working in your favor, you might want to work on your credit first — or consider other ways to pay off debt.

Personal loans have one of the widest APR ranges of any available loan product — currently between 6% and 35.99%. The difference between a bad credit rate and an excellent credit rate can be more than 25%. However, you could save between 5% and 10% if your score improved from bad to fair credit. The point: You may want to replace your bad credit consolidation loan with a new fair, good or excellent credit loan if your scores improve significantly after you consolidate a bunch of credit card debt. 

How to shop for debt consolidation loans

Although you may get several loan offers by hitting the “Get Started” button, it's worth it to take a few extra steps to get the best debt consolidation for your financial situation.

Calculate what you could save by consolidating

It’s not enough to simply compare the interest rates to pick the right debt consolidation loan. You need to evaluate the terms based on your priorities.

Here’s how you can think about it:

• If you want to save as much money as you can in the long term, compare the APR, repayment term and total interest you'll pay over the life of the loan. A lower rate and shorter term lead to lower repayment costs, even if your monthly payment is higher.
• If lowest possible monthly costs are the goal, a longer term makes sense — but you’ll likely pay more over time. Keep in mind that the longer you spend repaying any debt, the more you spend on interest and, potentially, fees.

How to decide which is best:

• Offer A: Best if you want to avoid any fees and minimize your interest.
• Offer B: Despite the lower rate and payment, this one doesn't cut it because you'll end up only taking home $9,000 for debt payoff since the $1,000 fees are deducted.
• Offer C: If the lowest monthly payment is your main priority, this loan offers that. However, the APR is 3 percentage points higher than the calculator estimated you could qualify for, and you'll pay almost $2,400 extra in interest over the life of the loan. 

Pros and cons of debt consolidation loans

How to use a debt consolidation loan 

You could benefit from debt consolidation if you have high-interest debt and multiple balances you’d like to pay off. It’s also convenient as you might both save money and make repayment simpler thanks to fixed monthly payments. You can use the loan for various types of debt, from credit cards to different types of short-term loans.

Consider debt consolidation if:

• You want to bring down monthly debt costs
• Your goal is to save on interest charges
• You want to combine several payments into one

Once you’re approved, you'll use the funds to get rid of your existing balances. Some lenders even send the money directly to your card issuers or lenders. Others deposit it into your bank account instead, in which case you’ll need to pay the debts yourself. Then, you'll make one fixed monthly payment to your new lender until you pay off the loan.

A personal loan isn’t the only way to consolidate debt. Some strategies involve new financing, others may involve using cash or other assets you already have. 

A few alternatives you can consider include:

• Pay credit cards off with cash if you can. The fastest path to debt payoff is to use savings to pay your balances. Just make sure it doesn't cut into your emergency fund savings. 
• Take out a 401(k) loan. If you have a fully vested 401(k) with your employer, you can borrow money on a portion of the value at low rates. Just keep in mind, you'll miss out on compounding interest on the investment you tie up with a loan. 
• Use a balance transfer card. If you qualify for a 0% APR balance transfer card and can pay the balance off before the promotional period, this could be a cheap way to consolidate credit card balances. Watch out for balance transfer fees of 3% to 5% of the amount you transfer. 
• Borrow against your home's equity. If you’re a homeowner, you could use a home equity loan, HELOC or a cash-out refinance to consolidate your debt. Your payment can be spread out for 15 to 30 years. The downside: You could lose your home if you default, and the debt will tie up your equity while you're paying it off.

Learn more about debt consolidation

Before you start applying for a debt consolidation loan, here are some personal loan resources so you know what to expect from the process. 

Meet our Bankrate experts

How we chose the best debt consolidation loan lenders

To select the best personal loans, Bankrate’s team of experts evaluated over 50 lenders. To earn a spot on our best debt consolidation loan list, a lender must have a debt consolidation loan-specific perk, an origination fee under 10%, availability in at least 80% of states, and at least one of the following: a 670 or lower minimum credit score, a joint borrowing option or a minimum APR below 8%. The best overall lender meets additional criteria, including nationwide availability, a Bankrate score of 4.5 or higher and at least two of the following: a 670 or lower minimum credit score, a joint borrowing option or a minimum APR below 8%.

We also assign each lender a Bankrate score based on a meticulous 20-point system, focusing on four main categories: