2. Consolidation loan for credit cards

Pros:

Fixed interest rates mean that your monthly payment will not change.

For good credit to excellent credit, you can get low APRs

Some lenders offer direct payment to creditors

Cons:

It is difficult to get a low rate for bad credit.

Some loans have an origination fee.

To apply for credit union membership is required.

To consolidate your credit card debt, you can get an unsecured personal loan through a bank, credit union or online lender. The loan should offer a lower interest rate.

Credit unions may offer more flexible terms and lower rates to their members than online lenders. This is especially true for borrowers with bad or fair credit (689 on the FICO scale) Federal credit unions charge a maximum APR of 18%.

For borrowers with good credit, bank loans offer competitive APRs. Existing customers might be eligible for higher loan amounts or rate discounts.

Pre-qualification for a consolidation loan is possible with most online lenders. However, this feature is not available at all to banks or credit unions. You can get a preview of what rate, loan amount, and term you might receive before you apply.

Look out for lenders who offer debt consolidation features. Some lenders specialize in consolidating credit card debt, such as Payoff. Some lenders, such as Discover will direct loan funds to your creditors, making it easier.

Are you unsure if a personal mortgage is right for you? You can use our debt consolidation calculator for all your debts, to see the typical interest rates and calculate savings.