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When you’re living under a mountain of credit card debt, it can feel like there’s no way out. Making the minimum payments on several credit cards can be challenging and get you nowhere with interest charges that keep piling up. With the average household with credit card debt owing more than $16,000 and an average interest rate of 16%, it would take 14 years to pay off the debt with a total cost of $40,000.

Debt consolidation can help you escape the cycle of debt by combining all credit card balances into a single loan with better terms. By consolidating your credit card debt, you will have one monthly payment and one interest rate that is likely lower than what you are paying now.

There are several ways to consolidate credit card debt. Here are options that may fit your situation.

Balance Transfer Credit Card

Good for balances under $15k

If you have less than $15,000 in credit card debt and good to excellent credit, the best option is likely getting a new credit card with a balance transfer offer. These cards offer a low interest rate or a promotional 0% APR for up to 21 months. There are a few important things to keep in mind before transferring a balance:

  • Your credit limit will likely be capped at $15,000. Many credit card issuers also limit how much can be transferred to a new card.
  • Some credit cards have annual fees. Factor this into your calculations.
  • Most cards charge a fee of 3% to 5% to transfer a balance. Don’t forget to consider this or look for a card without a balance transfer fee.

As an example, suppose you have $16,000 in debt with a 16% interest rate. If you transfer the balance to the Chase Slate card, which has a 0% promo APR for 15 months and no balance transfer fee during the first 60 days, you will pay off the balance in 49 months instead of 378 months with a fixed $371 per month payment and assuming you qualify for a 13.24% APR after the promotion ends.

You can use a balance transfer calculator to calculate how much you can save by transferring your balances and if it’s worth it.

Personal Loan

Good for balances over $15k

If you have debt of more than $15,000, you probably can’t transfer it to a new credit card. In this case, your best option may be looking for a personal loan from a bank, credit union, private company, or peer-to-peer platform. A personal loan is not a revolving loan like a credit card so the balance will have less negative impact on your credit score than a new credit card, and you can likely get a larger loan amount

Be sure you only take out a personal loan if the interest rate is lower than you are paying now with any origination fees and closing costs factored in. You may also face a prepayment penalty if you pay off the balance early.

Other Options

Proceed with caution

While personal loans and balance transfers are usually the best option for consolidating debt, there are other options that may be a better fit for you. These options do come with serious drawbacks to consider, however.

Home equity loans and home equity lines of credit (HELOCs) can be used to consolidate debt. These loans are secured by your home, which means defaulting on the loan will risk your home. It’s generally not recommended to convert unsecured credit card debt into secured debt due to te risk. Home equity and HELOC loans also come with a range of fees, including home appraisal fees and origination fees, despite their very low interest rates.

A debt consolidation company is another option to consider. These companies can help you set up a payment plan for your debt and negotiate better terms with your credit card issuers. The down side is you will be charged a fee of 30% to 70% of the balance and it can be hard to find a reputable debt consolidation firm.

You may also qualify for hardship programs offered by your credit card companies if you have extenuating circumstances like a serious illness or job loss. In this case, your card issuer may offer a payment plan with a reduced interest rate.