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16 Best Companies to Consolidate Your Debt (Including Credit Cards)

Debt

16 Best Companies to Consolidate Your Debt (Including Credit Cards)

Are you struggling to make your current monthly loan payment? When you consolidate your debt, you can save money by paying a lower interest rate. And with interest rates projected to rise in the near future, consolidating your loans today can save you extra money compared to if you wait.

It doesn’t matter if you have credit card debt, student loans, or medical debt, some companies can help you consolidate your debt into a single monthly payment with a lower interest rate and more flexible repayment terms.

What is Debt Consolidation?

Debt consolidation is when you combine several of your high-interest debt balances into a single loan with one monthly payment.

For example, if you consolidate two credit card balances and an existing personal loan, you consolidate three monthly payments into a single monthly payment with a potentially lower interest rate.

A debt consolidation loan is usually for your high-interest debt including:

  • Medical debt
  • Credit card debt
  • Personal loans

Just like home mortgage loans and student loans have different interest rates and repayment terms, debt consolidation loans also have different interest rates depending on the type of debt and your credit score. So, if you have student loans and credit card debt you want to consolidate, it could be best to apply for two different loans because your refinanced student loans may still have a lower interest rate than your credit cards.

You may also be able to consolidate your student loan balance into a debt consolidation loan, but you will almost always be better off refinancing your student loans separately to get a lower interest rate.

Benefits of Debt Consolidation Loans

One of the best benefits of a debt consolidation loan is that they can help you pay off your debt without hurting your credit score. When you’re up to your eyeballs in debt, it can feel that everybody is trying to take your last dollar while trying to “help” you get out of debt.

The only problem is that their best interest isn’t always in your best interest because they earn more profit by charging you monthly fees or higher interest rates.

Save Thousands in Interest Payments

By using a debt consolidation loan, you pay off your existing credit card balances, and those accounts become “current” again. You still have to repay your balance, but you can save hundreds or even thousands of dollars in interest because you may pay a substantially lower interest rate.

And, you’re also put on a fixed payment plan that “forces” you to repay the entire balance within a specific number of months. In other words, consolidating your debt holds you accountable for being financially responsible.

By keeping your balance with your credit card company, you’re only required to make the minimum monthly payment, which might only be $35. Because credit cards are a revolving account, you can continue adding to your balance which only makes your monthly interest charges even higher.

How Much Can You Save With a Debt Consolidation Loan?

Is a debt consolidation loan worth it? It depends on how much money you can save.

Here’s a quick scenario of how much money a debt consolidation loan saves you. Let’s assume you currently have $15,000 in credit card debt with a 15% interest rate.

Option 1: Continue making the minimum monthly payment with your credit card company

If you keep your balance on your existing credit card and don’t add to the balance amount, your estimated minimum monthly payment will be $337 for the next 376 months (that’s 31 years!) and pay $18,229 in total interest. Your original $15,000 balance becomes $36,458; twice your original balance amount.

Option 2: Consolidate Your Debt for 5.99% Interest

By consolidating your debt with a two-year loan and 5.99% interest, you’ll only pay about $1,000 in interest. That’s a savings of $17,000 by switching to a debt consolidation loan instead of only making the minimum monthly payment with your credit card company.

To realize these savings, you’ll need a two-year loan with $655 monthly payment, but I’m sure buckling down and pinching pennies for two years is well worth the tradeoff.

This is only one example, and you’ll have to plug in your own figures to see how much you can save with a debt consolidation loan calculator. Once you see how much you can save, you might feel more compelled to apply for a loan.

How to Consolidate Your Debt

Consolidating your debt is usually as easy as when you originally applied for the loan. But, there’s a correct way and wrong way to consolidate your debt. We’ll show you the correct way so debt consolidation can save you money and a few headaches.

The most important thing is to get the loan with the lowest interest rate possible. To get the lowest interest rate, you need to choose the loan with the shortest repayment term (two years vs. five years) and have your loan balance as low as possible (only borrow $5,000 instead of $15,000 for example).

While you might not be able to make a large lump-sum payment right now to reduce your balance amount, you can choose how many years it takes to repay your loan. For now, choose the shortest loan terms possible as long as you’re confident you can make the monthly payment.

Only Consolidate Your Debt When…

In many cases, debt consolidation loans are a better option than your current debt repayment method. But, you should only apply for a debt consolidation loan for these reasons:

  • You will pay less cumulative interest and fees
  • You will get out of debt sooner

Before you accept the lender’s loan offer, you will see what your total loan costs will be once it’s paid in full. You can compare this rate to the projected interest you will pay with your current debt payments.

As a side note, you should only accept a loan offer if you can afford the monthly payment. Our starter budget can help you maximize your monthly spending and saving, so you have the most money possible to pay the highest monthly payment possible. If you currently can’t afford the monthly payment for a two-year loan, consider a three-year or four-year loan. As your disposable income increases, you may be able to make extra payments to repay your loan early without penalty.

What to Look For In a Debt Consolidation Company

There are dozens–if not hundreds–of debt consolidation companies that can consolidate your debt. Maybe some of them call you or send you a postcard in the mail. They might be a legit company. However, they might not be working in your best interest if there are hidden fees or clauses.

You should look for a company that doesn’t charge the following fees:

  • Application fee
  • Early payoff penalties
  • No introductory or “teaser” interest rates

Many lenders don’t charge an origination fee, and others charge a fee ranging from 1% to 6% of the loan balance. The origination fee depends on your credit profile, loan size, and repayment terms. Be sure to read the “fine print” for any lender you consider before accepting their offer.

Fixed Interest Rates vs. Variable Interest Rates

In almost every case, you should apply for a fixed interest rate loan first. You will pay the same interest rate for the entire life of the loan. Loan interest rates are at historical lows and are projected to increase in the near future. With a variable rate loan, your payments increase with each rate hike. Make it easy, and secure a low rate today to predict your monthly payment amount.

Only get a variable rate loan when you can pay off the balance within a year. For most people, it’s better to hedge your bets and choose a fixed rate loan. You’re still saving money compared to your original interest rate, and you have the extra peace of mind that comes with a fixed interest rate.

Some lenders only offer fixed interest rates because variable rates are somewhat unpredictable. If you’re living on a tight monthly income, fluctuating rates cause unnecessary stress. With a fixed interest rate, you make the same monthly payment amount every month.

The Best Debt Consolidation Companies

Unfortunately, there are a lot of shady characters in the debt consolidation space, so you need to do your due diligence when you’re ready to consolidate your debt. Our list gives you the names of companies you can trust to help you get a loan and not surprise you with hidden fees.

Don’t forget to sign up for automated monthly payments. Some lenders offer a 0.25% interest rate discount when you schedule automatic payments to be withdrawn from your checking account on the same date each month.

We also recommend getting a quote from at least three different lenders to compare your loan offers to make sure you don’t overpay.

1. Credible

Credible is probably one of the easiest ways to consolidate your debt quickly for personal loans and student loan refinancing! Remember, the sooner you consolidate, the more money you can save because of the lower interest rate.

Consolidating your loans with Credible is easy because they compare the rates of multiple lenders with a single search. You instantly receive loan offers from at least three lenders. While you can apply for a loan from each lender individually, you can save time by sharing your loan information with Credible.

For example, Credible lets you consolidate your credit card debt for an interest rate as low as 4.99%. If you’re currently paying 15% or 20% by keeping the balance with your credit card, you can save a mountain of cash.

And, when you refinance your student loans through Credible, you can compare the rates of nine lenders at once when you want to refinance your student loans.

2. SoFi

SoFi offers the following debt consolidation loans in three to ten-year repayment terms:

  • Personal loans
  • Student loan refinancing
  • Medical resident refinancing
  • Mortgage refinancing

One loan benefit unique to SoFi is unemployment protection. If you lose your job at no fault of your own, SoFi suspends your payments for up to 12 months! SoFi places your loans in forbearance and even helps you find a new job with their career coaching team.

With your loans in forbearance, interest still accrues that you need to pay monthly. Or, it will capitalize into the current loan balance–make the principal amount larger–if you wait to pay once your loan exits forbearance.

You can also receive a six-month deferment with SoFi’s Entrepreneurship Program. This program lets you focus on launching a business and having extra capital to get your operation running. This benefit and the unemployment protection are two perks that most lenders do not offer and can be worth the application.

3. LendingClub

While you can go to your local bank or credit union to consolidate your debt, you can save some money with LendingClub.

At LendingClub, you can consolidate between $1,000 and $40,000 for your debt and credit card balances. The lending terms are slightly more rigid as you must choose either a 36-month or 60-month lending term and it’s not available to borrowers living in Iowa or West Virginia.

What makes LendingClub unique is that it’s a peer-to-peer (P2P) lending platform. By cutting out the bank as the “middleman,” your loans are funded by a group of individual investors who are regular people just like you. You send your monthly payment to LendingClub, and LendingClub sends the interest payment to the investors as their monthly profit.

While you still have to pay interest with LendingClub, it might not be as much as a regular lender. So far, more than two million customers have used LendingClub to help them save money to become debt-free sooner! And, you will pay a fixed interest rate and never pay a prepayment penalty if you repay your loan early.

4. Even Financial

Even Financial is another lender comparison site that compares the loan rates from several lenders in an instant. It’s completely free to use Even Financial, and you can submit a loan request from $1,000 to $100,000. To get an instant quote, you’ll have to provide your credit score, desired borrowing amount, loan purpose, and contact information.

Your interest rate can be as low as 4.99%, and your loan length can be as short as 24 months or up to 84 months. Although Even Financial is a lender comparison service, you won’t pay an extra dime if you apply for a consolidation loan through them.

5. Payoff

Payoff is designed exclusively to refinance your credit card debt. Once your Payoff loan is approved, you send your funds to your credit card company to pay the card in full, and you begin making the new, lower monthly payment to Payoff instead.

Your balance must be between $5,000 and $35,000 to apply, and you must also meet the following requirements:

  • FICO score of 640 or higher
  • 50% or less Debt-to-Income ratio (i.e., Your debt must be less than $20,000 if you make $40,000 per year)
  • Three years of good credit
  • Two active credit accounts with current balances and no more than one new installment loan in the last 12 months
  • Zero delinquencies greater than 90 days in the last 12 months

If you meet the general requirements, you can check your eligibility with Payoff for free, and it won’t hurt your credit score as it’s a soft inquiry only.

According to Payoff, the average borrower sees a 40-point increase in their FICO score once their loan is paid in full!

6. FreedomPlus

If your balance is at least $10,000, FreedomPlus offers loans starting at 6.99% for a two-year term. Your loan application is usually approved within three hours, and you will receive your funds within 48 hours once all your paperwork is signed. Besides the quick turnaround, FreedomPlus let you choose your payment date. 

To be considered for a FreedomPlus loan, you must meet these three minimum requirements:

  • 640 credit score or higher
  • An annual income of $34,000 or higher
  • A debt-to-income ratio of less than 40%

If you meet these basic requirements, you can get a loan with a two to five-year repayment term. And, you can get an additional interest rate discount if you borrow with a co-signer and have at least $40,000 in retirement savings!

7. Prosper

Prosper has helped 600,000 people–just like you!–consolidate more than $9 billion in debt. You can consolidate up to $35,000 in debt with a three or five-year loan term. And, interest rates start at 6.95% which is a rock-bottom rate and at least one-third the rate of your current credit card interest rate!

8. Upgrade

Fixed rates and 36-month or 60-month terms on a loan balance up to $50,000 is what you can expect from Upgrade. You won’t pay a prepayment penalty, and Upgrade will send your money to your bank the next day once all the loan paperwork processes.

If you still prefer to send your payment by paper check, Upgrade doesn’t charge an additional fee. Other online lenders charge an additional fee for mail-in payments to encourage electronic payments to keep costs low. Of course, scheduling automatic payments can still be the best option as you can receive an auto-pay discount each month.

9. Upstart

Founded by ex-Google employees, Upstart is a go-to lending platform for young professionals with minimal credit history. Instead of basing your interest rate entirely on your credit score, Upstart takes your work history and field of study into consideration too.

You can refinance your credit cards, personal debt, and student loans with Upstart with a balance up to $50,000 for either a three-year or five-year loan term. It takes two minutes to determine your eligibility, and you can receive your funds the next day.

10. LendingPoint

LendingPoint is an option if you have near-prime credit near the 600 credit score range. While they don’t offer the best interest rates, it can still be cheaper than the current interest rates you’re paying.

Some relief can better than no help at all. A debt consolidation loan from LendingPoint isn’t the same as a habit of broke people who constantly rely on payday loans to financially survive one month to the next.

Your only two repayment options are 12 months and 24 months with LendingPoint so you’ll need to be serious about paying off your debt if you need to consolidate a relatively large sum. To help keep the debt-free momentum going, LendingPoint collects two payments a month to coincide with your paychecks.

While LendingPoint sounds a lot like a payday lender, you won’t pay all the sky-high fees and the potential 1,000%+ APR that payday lenders charge.

11. LightStream

LightStream is the online lending division of SunTrust bank–maybe there’s a branch near you! They offer credit card and debt consolidation loans with a minimum balance of $5,000. Despite being owned by SunTrust bank, you do not have to be a SunTrust member to apply for a loan from LightStream.

If you’re not satisfied with your application experience, LightStream offers a $100 loan experience guarantee. They will also beat the rate of a competitor too (conditions apply).

12. CashUSA

CashUSA provides you with access to an entire network of lenders offering loans up to $10,000. When you apply for a debt consolidation loan with other companies, only one lender sees your application. But, at CashUSA, your request is shared with multiple lenders at once. It saves you time and gives you a great chance of being approved!

The loan can be used for practically any purpose, including debt consolidation, and CashUSA doesn’t charge any fees for their service.

Your repayment term can be as short as 90 days or up to 72 months. Loan requests can be approved in a matter of minutes, even when you have “less than perfect credit.” To submit your loan request, you must meet these and a few other basic qualifications:

  • At least 18 years old
  • Steady monthly income of at least $1,000 after taxes
  • Own a personal checking account
  • Ability to provide work and home phone numbers, plus a valid email address

13. Avant

Avant offers debt consolidation loans for borrowers with average credit--a credit score between 600 and 700–so you can borrow between $2,000 and $35,000 and still pay less interest than your current debt interest rate.

The lowest interest rate is 9.95% APR. So, you’ll only want to consider this loan for your credit cards which most likely have an interest rate of 15% or more.

Besides competitive interest rates, Avant also offers next-day deposits when your application is approved by 4:30 PM Central Standard Time. Other lenders mentioned here offer next-day deposits too, but others might take up to seven days to put the money in your bank account.

14. PersonalLoans.com

Another internet favorite is PersonalLoans.com because you can get a loan for as small as $1,000.

PersonalLoans is not a direct lender but offers a service that helps connect users with lenders who can offer them loans. Although they are not focused specifically on debt consolidation, lenders in their network offer loans up to $35,000, which can be used to consolidate debt.

There are some minimum requirements you will need to meet to request a loan with PersonalLoans.com including:

  • Minimum 580 credit score
  • Monthly income of at least $2,000

If you meet these and a few other basic requirements, PersonalLoans.com compares your information with its network of lenders to try to find a loan that can work for you.

You can get a loan from a peer lending platform or an online bank. If you qualify, a lender will present you with a loan offer and provide you with interest rate information.

15. Discover Personal Loans

It can pay to discover with Discover Personal Loans where you can get a debt consolidation loan for only 6.99% APR. Your repayment terms can be between 36 and 84 months depending on the size of your loan.

Another reason to consider Discover Personal Loans is that they streamline the loan application process. Discover sends your loan money directly to your creditors to immediately pay off your high-interest debt. That way, you can send your monthly payments directly to Discover–instead of your creditor–and pay a lower interest rate.

Other lenders deposit the money into your bank account, and you’re responsible for sending the money to your current credit accounts to repay the balance.

If you don’t have the time–or can’t resist the temptation of having a money windfall in your bank account–Discover can be a great lending option.

16. Wells Fargo

Sometimes, it can be hard to beat the convenience of a brick-and-mortar bank. Wells Fargo offers competitive rates and higher borrowing limits if you have more than $35,000 in debt that needs to be consolidated. Another benefit of borrowing through a physical bank like Wells Fargo is that you can make in-person payments for added convenience.

Wells Fargo also offers relationship discounts if you have an active bank account with Wells Fargo and are enrolled in automatic payments. With these discounts, your interest rate can be cheaper than the online-only lenders. It doesn’t hurt to compare rates to help you save money.

17. Peerform

Peerform is another P2P lending platform that helps you save money on debt consolidation. Sometimes it’s helpful to avoid using a bank, especially if you have an average credit score in the 600 to 700 range. The application process can take longer than some of the other online lenders.  Your loan application is posted on the Peerform marketplace, and individual investors have to offer funding, but you can save a couple of hundred dollars in interest charges.

Avoid These Types of Debt Consolidation Companies

Remember how we said that not every debt consolidation company is looking out for your best interest?

You want to avoid debt relief and debt management companies. While there are many legit companies in this sector, using most of these companies will cost you more than getting a debt consolidation loan.

These companies charge a monthly fee ranging from $50 to $100 plus your monthly loan payment. Debt management companies will negotiate lower rates with your creditors. Or, they will help you apply for a debt consolidation loan. Each month, you send them the monthly payment, and the company gives the monthly payment to the lender.

For the convenience, debt consolidation companies are better than nothing. If it’s the only way to consolidate your debt, the extra monthly payment can be worth the convenience. Your only responsibility is to make sure there’s enough money each month in your checking account to cover the monthly payment.

You might also consider one of these companies if you have sub-prime credit–a credit score below 580–and cannot get approved with one of the companies listed above. Make sure your monthly fees don’t cause you to pay more than you already do. It’s still possible to save money and make a plan to become debt-free.

If you go the debt management company route, make sure you use a company that’s certified by the National Foundation of Credit Counselors.

What to Do When You Consolidate Your Debt

Consolidating your debt isn’t a “get out of jail free card” to borrow more money. You’re still responsible for repaying your current balance. The only difference is that you’ll pay less in interest.

These three tactics below will help you make sure you don’t add to your current debt balance. You can contribute more to your regular monthly payment so you can pay off your loan even sooner!

Follow the Debt Snowball Method

To repay your debt faster, you should also pursue Dave Ramsey’s Baby Steps. His debt snowball strategy focuses on paying the debt with the smallest balance and highest interest rate first.

Debt consolidation is a tool to help you become debt-free sooner. You can finally begin living the life you dream of.

The debt consolidation companies we recommend won’t charge you a penalty if you repay your loan early! Challenge yourself to pay off your debts sooner by making extra payments.

An easy way to do this is to sell your unused items. Use the proceeds to make extra monthly payments. The sooner you make an extra payment, the less cumulative interest you’ll pay because your loan balance is smaller. Even if you can only contribute an extra $20 a month, it’s still positive progress.

To help us get out of debt, I sold my $20,000 car and bought a $4,000 one instead. You can also find some extra cash by selling some of these items:

When selling your used items isn’t enough, don’t forget that you can also start a side hustle to bring in some extra cash using your knowledge and muscle! The beauty of side hustles is that they are a source of recurring income. You work as much or little as you want to, depending on your work and family commitments.

Alternatives to Debt Consolidation Loans

In some instances, consolidating your debt doesn’t make sense. Usually, this is if you won’t get a lower interest rate or you don’t have enough debt to consolidate. Here’s what you should do if you fall in either of these categories.

Negotiate a Lower Interest Rate With Your Current Lender

If you already have a history of consistent monthly payments and a relatively small balance, call your credit card company or lender to see if you can negotiate a smaller rate. In some instances, they might reduce your rate for several months. Or, maybe for the entire loan! They would rather keep your business than see you transfer your balance to a debt consolidation company.

Whether or not your lenders discount your rate, repay your balance as soon as possible to pay less cumulative interest.

Sign up for a 0% APR Credit Card

A credit card with a 0% APR can save you big money on interest if you can’t pay off your credit card bill in full, or you need to finance a large purchase. Some 0% APR credit cards offer the introductory rate on balance transfers. You can essentially refinance your credit card debt from a high-interest card to a low or no interest card.

Just make sure you can pay off your new credit card before the introductory APR period expires. If you don’t, the interest rate will increase.

Pull From Your Savings

If your balance is too small to consolidate, your only option is to pay off the balance early with extra payments. When you have money in your savings account, consider making a lump-sum payment. Make sure you don’t pull from your emergency fund to make this extra payment. Once you repay the loan, pay yourself the old monthly payment amount until you rebuild your savings account balance.

You should also consider making a lump-sum payment if you get a debt consolidation loan too. Smaller balances help you get a lower interest rate without shortening your loan repayment terms of the loan.

Summary

Debt consolidation loans help you sharply lower your monthly interest payments and get out of debt sooner. Using one of the best debt consolidation companies means you don’t have to worry about getting charged hidden fees. And, can improve your credit score in the process.

What’s your #1 reason to consolidate your debt?

Disclaimers

For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All loans made by WebBank, member FDIC.

Loans made through Upgrade feature APRs of 6.87%-35.97%. All loans have a 1% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay. For example, if you receive a $10,000 loan with a 36 month term and a 17.97% APR (which includes a 14.31% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your bank account and would have a required monthly payment of $343.28.

Over the life of the loan, your payments would total $12,358.22. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. All loans made by WebBank, member FDIC.

Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days. All loans made by WebBank, member FDIC.

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