What can debt consolidation loans be used for?

If you borrow a personal loan for debt consolidation, you can use it for almost any legal personal expense. Most commonly, it’s used to consolidate high-interest credit card debt as well as pay off other debts, such as payday loans, even buy now, pay later accounts. Some debt consolidation lenders will repay your creditors on your behalf — that way, you won’t be tempted to use the funds for other means.

What are alternatives to debt consolidation loans?

There are many different ways to consolidate debt. Some involve new financing, others may involve using cash or other assets you already have. Pay credit cards off with cash. Whether you pay some or all of the balance off with cash, 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 rates typically much lower than personal loans, mortgages or credit cards. 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. With homeowners sitting on record amounts of equity, you may be advertised a home equity loan, HELOC or a cash-out refinance to consolidate your debt. The good news: 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.

Does a personal loan for debt consolidation hurt your credit?

Consolidating debt with a personal loan could temporarily drop your credit score because there will be a hard credit inquiry and a new account on your credit report. However, as long as you make consistent on-time payments toward the loan, your score should only improve over time.

What is the minimum credit score for a debt consolidation loan?

Many reputable lenders require a credit score of at least 600, but there are exceptions, including online lenders Avant and Upstart. Keep in mind that if your personal score isn’t high enough, you’re not necessarily out of luck. You could take steps to improve your score before applying for a loan. Alternatively, you could enlist a personal loan cosigner or co-borrower who is more creditworthy.

What fees come with debt consolidation loans?

For personal loans for debt consolidation, be wary of origination fees. Depending on the lender, they can range up to 12% of your loan amount and are typically removed from your disbursement. That means that if you need a $10,000 debt consolidation loan but work with a lender charging a 5% origination fee, you may need to actually borrow a $10,500 loan. As you shop around with personal loan lenders, prioritize those that don’t charge for origination, or at least those that don’t require it. Some lenders, like SoFi, offer an optional origination fee to “buy down” your APR. As you consider debt consolidation alternatives, don’t forget about other fees. Balance transfer cards, for example, typically impose a balance transfer fee that can range from 3% to 5% of the amount you’re transferring. For a large debt, that’s no small chunk of change.

Best debt consolidation loans in February 2026

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Updated Feb. 26, 2026

What to know first: The best debt consolidation loans can help you pay off high-interest debt, simplify your bill-paying schedule, lower your payments and even boost your credit scores. By combining other balances into one loan with an interest rate as low as 5.99%, you may save hundreds of dollars in interest.

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Upgrade Personal Loan: Best overall

APR: 7.74% - 35.99%with AutoPay
Minimum credit score: 600
Estimated monthly payment: $357
Loan amount: $1K - $50K
Bankrate score: 4.6 out of 5 stars
Best overall

Happy Money Personal Loan: Best for credit card consolidation

APR: 7.95% - 35.99%
Minimum credit score: 640
Estimated monthly payment: $358
Loan amount: $5K - $50K
Bankrate score: 4.5 out of 5 stars
Best for credit card consolidation

LightStream Personal Loan: Best for large loan amounts

APR: 7.24% - 23.89% with AutoPay
Minimum credit score: 660
Estimated monthly payment: $336
Loan amount: $5K - $100K
Bankrate score: 4.5 out of 5 stars
Best for large loan amounts

LendingClub Personal Loan: Best for wide range of repayment terms

APR: 6.53% - 35.99%
Minimum credit score: 600
Estimated monthly payment: $353
Loan amount: $1K - $60K
Bankrate score: 4.7 out of 5 stars
Best for wide range of repayment terms

Best Egg Personal Loan: Best for secured loan options

APR: 6.99% - 35.99%
Minimum credit score: 600
Estimated monthly payment: $355
Loan amount: $2K - $50K
Bankrate score: 4.6 out of 5 stars
Best for secured loan options

Discover Personal Loan: Best for good credit borrowers

APR: 7.99% - 24.99%
Minimum credit score: 660
Estimated monthly payment: $340
Loan amount: $2.5K - $40K
Bankrate score: 4.8 out of 5 stars
Best for good credit borrowers

Patelco Personal Loan: Best for a credit union loan

APR: 9.30% - 17.90%
Minimum credit score: 680
Estimated monthly payment: $333
Loan amount: $300 - $100K
Bankrate score: 4.5 out of 5 stars
Best for a credit union loan

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Quick facts about debt consolidation

Debt consolidation loans work by paying off the balances of several credit types with a new loan, typically with a fixed rate and payment. For instance, you could replace multiple credit card balances with a single installment loan and a finite payoff point. If you have good credit, you might even qualify for a far lower interest rate on the new loan.

Personal loans for debt consolidation are popular because they can be funded quickly with no collateral requirements. In the case of not having good credit, you could qualify for a secured personal loan (that doesn’t require collateral) or enlist a creditworthy cosigner on an unsecured loan application.

Besides personal loans, you have multiple debt consolidation options, including a home equity loan, home equity line of credit, cash-out mortgage refinance, balance transfer credit card or 401(k) loan.

Calculate what you could save by consolidating

How to use your results

Let's assume you want to consolidate $10,000 worth of credit card debt at an average rate of 20 percent, and have a credit score of 750. According to Bankrate's debt consolidation calculator, you're likely to receive an APR of 11 percent with an average term of 4.5 years, with a $236 monthly payment.

Next, you get three offers by applying for prequalification through the Bankrate website at the following terms:

Lender	A	B	C
APR	12%	10%	14%
Term (years)	5	5	7
Monthly payment	$222	$212	$187
Fees	$0	$1,000	$0
Total interest paid	$3,346.67	$2,748.23	$5,741.61

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.

1. Current total balance: Add up all the balances you want to consolidate.
2. Average interest rate: Calculate the average rate you're paying for all of your current debt by adding the rates you are paying on all the debt you're consolidating and dividing by the number of cards you're paying off.
3. Current total monthly payment: Add up your current monthly payments.
4. Pick your credit score bracket: The higher your score, the lower your rate should be!
5. Click the blue “Calculate” button: You'll see your estimated new monthly payment and total interest savings.

How to get the best debt consolidation loan with Bankrate

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.

Know which debt is costing you the most.

Debt consolidation is not always about getting a lower interest rate. You might need to spread out the payment on a short-term car loan payment you can't afford anymore. Or pay off all those buy now, pay later plans so you only have one payment to keep up with.
Nail down your credit score.

The rate on your debt consolidation loan depends primarily on your credit score. If you over-estimate your score, you may not end up with the best debt consolidation loan rate.
Learn about lenders' requirements so you can focus your application efforts.

Want to spread your payment out over seven years instead of five? Need more than $50,000? Don't want to pay fees? Use Bankrate's rate table to start narrowing your lender choices.
Have your income and banking information ready.

The loan amount and term your lender offers you depends mostly on how much — or little — you earn. Your lender may verify your income by checking direct deposits in your bank account. If you want your funds the same day, you'll typically need to give the lender permission to link to your bank account.
Watch for fees and perks.

Fees will eat into the amount you borrow for debt consolidation. See if you qualify for debt consolidation lenders with no-fee loans. You might get extra discounts for autopay or loyalty to a particular bank or credit union.

Bankrate's marketplace lending platform makes it easy to get all the information you need to get the best debt consolidation loan. If you have no idea what you qualify for, click on the “Get Started” button at the top of the page to get prequalified without damaging your credit.

Is now a good time to consolidate debt?

The right time for debt consolidation all depends on your current rate, financial goals, creditworthiness and how stable your income is. These four scenarios cover most people's needs, but you will need to review your financial goals to be sure debt consolidation is the right choice.

The best time to consolidate has less to do with the Fed or the broader economy and more to do with your own finances. If your credit score has improved or you can lock in a meaningfully lower rate than what you’re paying now, don’t wait. Take any opportunity to save on interest or pay down your balance faster. Holding out for future Fed cuts is just another way of trying to ‘time the market’ — and that’s never smart personal finance. If you can find the savings today, grab them. There’s no guarantee they’ll be there tomorrow.
Sarah Foster, Bankrate Federal Reserve and economy reporter

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.

Financial wellness health check

A debt consolidation loan can help get you on track to a healthier wallet. One way they can do so is 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. Budgeting is money meal planning, and the more you do it, the sooner you’ll build a financially well future.

Pros and cons of debt consolidation loans

Pros

Possibly the biggest pro of a debt consolidation loan is that your rate should be lower than the average rates of the credit cards you're paying off.
You won't have as many due dates and monthly payments to keep track of — just one from your new debt consolidation loan.
No collateral is required. You could even pay off a small car loan balance to get a free and clear vehicle as part of your consolidation.
Funding is available in as little as one business day — much faster than any type of home equity or mortgage consolidation loan.
Paying off multiple credit card balances reduces your credit utilization ratio — which could give a big boost to your credit scores if you don't reuse your cards.

Cons

No minimum payment flexibility like you have with credit cards.
Funds can't be reused as you pay them off like revolving credit card accounts.
Origination fees may be as high as 12% of the amount you borrow.
Choosing a shorter term may strain your budget if you have a variable income or a sudden loss of income.
Rates may be higher than credit cards for bad credit borrowers.
Won't solve poor spending habits or the overuse of credit cards.

BANKRATE EXPERT FAQ

Ask the experts: Is a personal loan better than a balance transfer credit card for debt consolidation?

Mark Kantrowitz

Bankrate Expert Contributor, Student Loans

The interest rate on a personal loan may be lower than on a balance transfer credit card. However, balance transfer credit cards may offer a teaser rate, even a 0% interest rate, that is good for a few months. When the introductory interest rate expires, you have to pay a much higher interest rate. Balance transfer credit cards may offer more flexible payments, so long as you pay at least the minimum payment, which may be higher than on a personal loan. But, check whether the personal loan allows prepayment without penalty.

Frequently asked questions about debt consolidation loans

If you borrow a personal loan for debt consolidation, you can use it for almost any legal personal expense. Most commonly, it’s used to consolidate high-interest credit card debt as well as pay off other debts, such as payday loans, even buy now, pay later accounts. Some debt consolidation lenders will repay your creditors on your behalf — that way, you won’t be tempted to use the funds for other means.
There are many different ways to consolidate debt. Some involve new financing, others may involve using cash or other assets you already have.
- Pay credit cards off with cash. Whether you pay some or all of the balance off with cash, 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 rates typically much lower than personal loans, mortgages or credit cards. 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. With homeowners sitting on record amounts of equity, you may be advertised a home equity loan, HELOC or a cash-out refinance to consolidate your debt. The good news: 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.
Consolidating debt with a personal loan could temporarily drop your credit score because there will be a hard credit inquiry and a new account on your credit report. However, as long as you make consistent on-time payments toward the loan, your score should only improve over time.
Many reputable lenders require a credit score of at least 600, but there are exceptions, including online lenders Avant and Upstart. Keep in mind that if your personal score isn’t high enough, you’re not necessarily out of luck. You could take steps to improve your score before applying for a loan. Alternatively, you could enlist a personal loan cosigner or co-borrower who is more creditworthy.
For personal loans for debt consolidation, be wary of origination fees. Depending on the lender, they can range up to 12% of your loan amount and are typically removed from your disbursement. That means that if you need a $10,000 debt consolidation loan but work with a lender charging a 5% origination fee, you may need to actually borrow a $10,500 loan.

As you shop around with personal loan lenders, prioritize those that don’t charge for origination, or at least those that don’t require it. Some lenders, like SoFi, offer an optional origination fee to “buy down” your APR.

As you consider debt consolidation alternatives, don’t forget about other fees. Balance transfer cards, for example, typically impose a balance transfer fee that can range from 3% to 5% of the amount you’re transferring. For a large debt, that’s no small chunk of change.

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.

Pros and cons of debt consolidation: Is it a good idea?

Get a more in-depth look at the pros and cons of debt consolidation loans.

5 best debt consolidation options

Learn about different ways to consolidate your debt.

How to consolidate debt without a loan

Want to consolidate your debt without a loan? Find out what options are available.

woman using smartphone and credit card while sitting in cafe

Debt consolidation loan vs. balance transfer credit card

Compare debt consolidation loans with balance transfer cards to decide which is best for you.

How we chose the best debt consolidation loan lenders

Bankrate's trusted debt consolidation loans industry expertise

Read our full methodology

years in business

lenders reviewed

loan features weighed

900

data points collected

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:

Availability covers loan amounts, qualification requirements, available terms and time to approval and funding. Lenders that serve the widest variety of customers and needs with speedy loans get the highest scores.
This category measures interest rates, penalties and fees. Lower rates and fees and fewer potential penalties result in a higher score. We also give bonus points to lenders offering rate discounts, grace periods and the ability to change borrowers' due dates.
Customers want a convenient application process and easy ways to contact the lender and manage their loan. We score lenders on their customer service hours and whether they offer an online application and account access, with a bonus for offering a highly rated app.
To effectively shop around, customers should be able to judge their eligibility and potential costs without a hard credit check. A lender scores higher if its website clearly discloses credit requirements, rates and fees, in addition to offering prequalification.

Written by

Denny Ceizyk Denny Ceizyk

Former Senior Writer, Loans

Best debt consolidation loans in February 2026

Unlock loan offers to consolidate debt

Best debt consolidation loans

How Bankrate works

How Bankrate works

Compare rates

Tell us the basics

Get matched and receive funding

Quick facts about debt consolidation

Calculate what you could save by consolidating

How to use your results

How the calculator works

How to get the best debt consolidation loan with Bankrate

Know which debt is costing you the most.

Nail down your credit score.

Learn about lenders' requirements so you can focus your application efforts.

Have your income and banking information ready.

Watch for fees and perks.

Is now a good time to consolidate debt?

Financial wellness health check

Pros and cons of debt consolidation loans

Pros

Cons

Ask the experts: Is a personal loan better than a balance transfer credit card for debt consolidation?

Frequently asked questions about debt consolidation loans

What can debt consolidation loans be used for?

What are alternatives to debt consolidation loans?

Does a personal loan for debt consolidation hurt your credit?

What is the minimum credit score for a debt consolidation loan?

What fees come with debt consolidation loans?

Learn more about debt consolidation

How we chose the best debt consolidation loan lenders

Bankrate's trusted debt consolidation loans industry expertise

Affordability

Availability

Customer experience

Transparency