Credit cards, personal loans, and other types of financing are common tools for covering expenses. But it doesn’t take long for monthly payments to become a burden on budgets. With the right approach, debt consolidation can save you both time and money as you work to pay off your debt before it starts to impact your overall financial health.

Below, we’ll explain how to consolidate debt into a single financial solution with favorable terms and why using a debt consolidation loan could help you regain control of your finances.

Key Considerations

There are several types of debt consolidation options, including personal loans and balance transfers.
The benefits of debt consolidation include simplifying monthly payments and saving money on interest, which can help you pay off debt faster.
Paying off high-interest debts on time or faster can improve your credit score.

What is debt consolidation?

Debt consolidation is a debt management solution that can help you pay down or eliminate your debt. It involves combining debt from multiple sources—like across multiple high-interest credit cards or loans, for example—into a single loan or line of credit.;

Consolidation does not automatically erase your debt. Instead, it unlocks new ways to repay what you owe more effectively, including streamlined monthly payments and reduced total interest.

How does debt consolidation work?

If personal debt is starting to weigh you down, debt consolidation is a simple and effective way to manage your finances.

Essentially, you can pay off all or part of your existing debt with a new financial solution that offers better terms, namely a fixed interest rate, a single monthly payment, and a longer repayment period, if preferred. Two popular ways to consolidate debt include a personal loan or a balance transfer credit card.

Here’s how it works.

Financing details	Total debt	Consolidation loan
Principal	$75,000	$75,000
Interest rate	21.49% [avg.]	17%
Repayment term	3 years	3 years
Monthly payment	$2,859	$2,682
Bills paid/month	3	1
Total interest	$27,938	$21,556

Image is an example only and does not reflect actual customer information.

In this scenario, if you continued to make payments on your existing debt, you would need to pay $2,859 a month for three years to eliminate it. You would also pay $27,938 in interest during that time.

But if you secured a personal debt consolidation loan with a lower fixed interest rate of 17%, you would save $6,382 in interest over the course of the loan.

If your immediate focus is on the cost of your monthly payments, you may consider extending your repayment period. In the same example, consolidating your debt into a 10-year loan will decrease your monthly payment from $2,859 to $1,314. This is 54% less per month than your previous financing.

Keep in mind, however, that extending your repayment term will result in paying more total interest over the life of the loan.

What types of debt consolidation options are available?

There are several ways to consolidate debt. Here are some common options:

Personal loan for debt consolidation: A debt consolidation loan, like the one offered by BHG Financial, can be a wise choice if you qualify for a low interest rate and want to consolidate multiple types of unsecured debt. These loans do not require collateral, offer a fixed interest rate, and have a set repayment term, which can provide predictable monthly payments.
Balance transfer credit cards: These cards often come with zero interest or a very low introductory annual percentage rate (APR). This can be a good option for consolidating high-interest credit card debt if you can pay the entire balance before the promotional period ends. However, there are balance transfer fees to consider, and you could accumulate even more interest than what you started with if you can’t pay your balance in full before the introductory APR expires.
Home equity loan: Borrowers with significant home equity who are comfortable using their home as collateral for a loan can consider a home equity loan. Just like a personal loan, you’ll receive a lump sum that you’ll pay back with a fixed interest rate. However, you’ll need to have a substantial amount of equity in your home to qualify, and a home appraisal is typically required.
Home equity line of credit (HELOC): These loans are most similar to credit cards, allowing you to draw from a credit line as needed. However, the interest rate is variable, meaning it can fluctuate at any time and make budgeting unpredictable. This is also a secured loan, which means you can lose your home if you default.
Debt management plan: If you don’t qualify for other consolidation options, you may be able to enter into a debt management plan offered by a credit counseling agency. In this plan, a credit counselor will contact your creditors on your behalf and negotiate a repayment plan, which often includes a single monthly payment. Consider this only after exhausting other options, as fees can be high, and you risk severely damaging your credit score.

FYI: BHG Financial offers debt consolidation loans with fixed interest rates and low monthly payments, allowing you to spend less time managing debt and more time focusing on other priorities.

What are the pros and cons of debt consolidation? 

Debt consolidation can offer several advantages, but it’s also important to be aware of potential drawbacks.

Pros	Cons
Simplified payments: A single monthly payment is easier to manage.	Potential fees: Some consolidation options may come with origination fees (personal loans) or transfer fees (balance transfer cards).
Potentially lower interest rates: If you have good credit, you might secure lower rates than your existing debts, saving you money.	Lowest rates require good credit: Prime borrowers generally secure the lowest interest rates on consolidations. If you have bad credit or are behind on debt payments, you may not qualify for a more competitive rate.
Predictable payment schedule: Fixed-rate loans offer consistent monthly payments, making budgeting easier.	Potential for higher overall cost: If the new loan has a longer term, you could pay more interest over time. Balance transfer cards can have high APRs once the promotional period ends.
Improved credit utilization: Paying off high credit card balances can help improve your credit utilization ratio, which in turn can positively impact your credit score.	Risk of increased debt: Consolidation doesn’t resolve underlying financial problems. If you don’t change your spending habits, you could quickly accumulate debt again.

How does debt consolidation impact your credit?

The impact of debt consolidation on your credit can vary. In the short term, taking out a new loan or line of credit may temporarily lower your credit score due to a new credit inquiry and the addition of a new account. However, in the long run, debt consolidation can potentially improve your credit score by:

Lowering credit utilization: Consolidating revolving credit debt (such as credit card debt) through an installment credit (such as a debt consolidation loan) decreases your credit utilization ratio, which is a significant factor in credit scoring.
Simplifying payments: Making consistent, on-time payments on your new consolidation loan can help establish a positive payment history, which can improve your credit score.

Responsible management of your finances after consolidation is key to ensuring a positive impact on your credit score. It remains your responsibility to keep track of payment due dates on your consolidation loan, as any late or missed payments will result in a dip. Consolidating to one monthly payment makes it easier to handle your payments.

Choosing a debt consolidation strategy based on life stage

How does your debt-to-income ratio impact eligibility?

How can BHG Financial help with debt consolidation?

BHG Financial understands the stress of managing multiple types of debt and selecting the right solution for your financing needs. That’s why we offer personal loans specifically designed for borrowers to consolidate large amounts of existing debt.

Higher loan amounts: Most lenders offer personal loans between $1,000 and $100,000, but BHG can fund larger loan amounts up to $250,000.¹
Flexible repayment terms: We work with you to establish repayment terms that fit your budget and help keep payments manageable. BHG personal loans come with extended repayment terms of up to 10 years.^1,2
Streamlined application process: Our application process is designed to be efficient, so you can get the funds you need quickly. You can get your offers online in minutes. This will not impact your credit score.³

FYI: BHG’s concierge loan service and tailored loan options have earned us more than 3,400 5-star reviews on Trustpilot.

“The process for obtaining a debt consolidation loan was efficient, great communication, honest advertisement, professional and friendly staff. I would 100% recommend BHG Financial.”

- Marie Reed

“The team at BHG did not want to just throw money at me. They used sound financing principles to determine what I could legitimately handle given my current debt-to-income ratio and what is in my best financial interest. Good people looking out for the best interest of prospective clients.”

- Will

“Based on interest rates and the current economic climate, I chose to consolidate some debt with a fixed interest rate. The process was efficient and easy and the staff was amazing. They answered each question and were very honest.”

- Ada Hensley

Is BHG a good option for professionals looking to consolidate high-interest debt?

Consolidating your personal high-interest debt with BHG Financial’s personal loan can provide you with a fixed interest rate and a predictable, low monthly payment, saving you money in the long run. High-interest debt like credit cards tends to have higher annual percentage rates (APRs) than personal loans. Plus, credit card APRs are variable, meaning they change according to market conditions. These factors can significantly impact your budget.

How fast can I get funding with BHG for debt consolidation?

When you apply for a loan with BHG, you can get an approval decision within 24 hours.⁴ If approved, you will receive your funds in a single lump sum within as few as five days.⁴

Does BHG offer fixed or variable rates for debt consolidation?

BHG’s personal loans for debt consolidation have fixed interest rates, meaning that your monthly payments will remain the same throughout the repayment period.

What credit score is needed to qualify for a BHG debt consolidation loan?

Most borrowers who get a debt consolidation loan with BHG have a FICO Score of 744. When determining eligibility, BHG considers your income in addition to your credit score.

Ready to see what’s possible? Use our quick and easy payment estimator to get your personalized loan estimate in just seconds.

How does debt consolidation work FAQ

Are there fees for debt consolidation loans?

Some lenders may charge an origination fee for a debt consolidation loan, which is typically deducted from the loan amount. Other potential fees for personal loans include late fees or prepayment penalties for early payoff.

What is the difference between debt consolidation and debt settlement?

Debt consolidation involves taking out a new loan or line of credit to pay off current debts. You are still responsible for paying the full amount of your original debt, but with a new structure and potentially better terms. Debt settlement, on the other hand, involves negotiating with your creditors to pay less than the full amount you owe. This can significantly harm your credit score and may have tax implications.

Can I still use my credit cards after consolidating?

Yes, you can still use your credit cards if you consolidate them. Consolidation will pay off the cards, so your balances are at zero; it won't close them. That said, it’s generally recommended to avoid running up those balances again so you don’t accumulate more debt.

How long does it take to pay off consolidated debt?

The timeline for debt consolidation can vary based on the type of consolidation solution you choose and the lender’s process. Applying for a personal loan can be done relatively quickly, and funding can occur within a few days. Balance transfers can be processed within a few weeks. Debt consolidation with a new loan also depends on the terms you choose. Typical repayment terms range from one to 10 years.

Can I consolidate debt with bad credit?

Yes, it’s possible to consolidate debt with bad credit, but your terms may be less effective at saving you time or money. Applicants with bad credit are more likely to be approved for debt consolidation loans with higher rates, lower loan amounts, and fees. Not all lenders are willing to work with borrowers with lower credit scores. Specialty lenders may take on higher-risk borrowers.

Is debt consolidation a good idea for medical bills?

If you have several medical bills, debt consolidation can help simplify repaying them. Instead of paying several creditors each month, you’ll make a single monthly payment to one lender. Medical bill consolidation does not eliminate the debt.

Will consolidating debt stop collection calls?

No, debt consolidation will not stop debt collectors from calling you. However, consolidating debt may help you gain control over your debts by providing more effective ways to repay them. A few ways to stop collection calls include allowing credit agencies to negotiate on your behalf using a debt management plan, repaying the debt, or filing for bankruptcy. These options come with significant risk, and they could negatively impact your credit score.

If you need to consolidate debt, contact a BHG advisor today or use our quick and easy payment estimator to get your personalized loan estimate in just seconds.

Not all solutions, loan amounts, rates or terms are available in all states.

¹ Terms subject to credit approval upon completion of an application. Loan sizes, interest rates, and loan terms vary based on the applicant's credit profile.

² Personal Loan Repayment Example: A $59,755 personal loan with a 7-year term and an APR of 17.2% would require 84 monthly payments of $1,228.

³  There is no impact on your credit for applying. For personal loans, a complete credit history, which will appear as an inquiry on your credit report, will be performed upon acceptance and funding of the loan and may impact your credit.

⁴ This is not a guaranteed offer of credit and is subject to credit approval.

Testimonial(s) based on unique customer experience. Individual customer experiences may vary.  

Consumer loans funded by Pinnacle Bank, a Tennessee bank or County Bank. Equal Housing Lenders.

No application fees, commitment, or impact on personal credit to estimate your payment. 

For California Residents: BHG Financial loans made or arranged pursuant to California Financing Law license - Number 603G493.

If you’re feeling weighed down by credit card debt, you’re not alone. High interest rates can feel like an uphill battle, making it easy to fall behind and tough to catch up.

Understanding how to pay off credit card debt is the first step toward taking control of your debt and reclaiming your financial well-being. Here are a few practical strategies to eliminate credit card debt.

Key considerations

If you have a significant amount of high-interest debt and a good credit score, a debt consolidation loan can be a viable option for paying off credit card debt. For smaller debts, a balance transfer card could help you tackle debt faster.
If not consolidating or using a balance transfer card, set a goal and a budget for repayment; targeting one debt at a time using the snowball or avalanche method can help reduce your balances methodically.
Gradually exceed monthly minimum payments whenever possible to decrease your total interest over time. Even small extra payments can make a big difference in your credit card debt over the long term.

Why is credit card debt hard to pay off?

U.S. credit card balances have surpassed $1.21 trillion, according to the Federal Reserve, driven partially by high APRs.

Credit card debt is difficult to overcome. Even if you don’t make additional purchases, the interest compounds. Only paying the minimum each month means you will carry the debt from month to month, increasing your debt as you accumulate interest charges.

For example, if you’ve amassed $50,000 in credit card debt on a card with a 23% APR, you could pay up to $11,500 per year in interest. Without a plan in place to address the debt proactively, it can become a significant burden.

To start, pay as much as you can toward the debt. Some common ways to do this effectively and consistently include using the debt snowball or debt avalanche method.

What is the debt snowball method?

If you have balances on multiple cards, one of the best strategies to eliminate credit card debt is the snowball method. With the debt snowball method, you pay off the card with the smallest balance first before moving on to the next largest one.

This method is a good choice if you can’t afford to make large monthly payments but want to proactively chip away at your debt. Once you pay off a card, you'll redirect the funds you were using for that payment to your next card balance. You'll continue to do this until you’ve tackled each debt.

Here’s how it looks in action, using the following credit card balances as an example:

Credit card 1: A $5,500 balance and an APR of 16%
Credit card 2: A $2,000 balance and an APR of 20%
Credit card 3: A $10,000 balance and an APR of 23%

Using the snowball method, you’d focus on the second card on this list first because it has the lowest balance ($2,000). Once cleared, you’d move on to the next highest card balance ($5,500) before addressing the third card with a $10,000 balance.

Remember to make minimum payments on all other cards in the meantime; missing any minimum payment can hurt your credit score.

What is the debt avalanche method?

Attacking debt using the debt avalanche method involves paying off the account with the highest interest rate first, regardless of the balance. It can take a while to make progress on —especially if the balance on that card is excessive—but you’ll save money on interest in the long run.

The avalanche method may be a better strategy for you if you can confidently afford a bigger payment and want to pay less in interest while you work to become debt-free.

Here’s how debt avalanche looks in action, using the same credit card balances from above as an example:

Credit card 1: A $5,500 balance and an APR of 16%
Credit card 2: A $2,000 balance and an APR of 20%
Credit card 3: A $10,000 balance and an APR of 23%

Using the avalanche method, you’d tackle the third card first because it has the highest APR (23%). You’d focus on the second card next—APR of 20%—even though it has a lower balance, before moving on to the first card with the lowest APR.

Again, it’s important to focus on making every payment on time to protect your credit score and avoid tacking on additional late fees. It can take a while to knock out the first debt, so patience and consistency is key.

How can debt consolidation help? 

Consolidating personal credit card debt FAQs

Consolidating personal credit card debt can simplify your finances by combining multiple debts into a single monthly payment with more manageable interest rates. In the long run, this can save you from spending more money than you anticipated or previously agreed to on in-terest payments in the future.

Personal debt consolidation can impact your credit score differently depending on the method chosen. For example, applying for a new loan or credit card for consolidation may result in a temporary dip in your credit score due to inquiries, changes in credit utilization, and your his-tory using credit-based financial products. However, making timely payments on the consoli-dated debt can positively affect your credit score by demonstrating responsible financial man-agement.**

Yes, personal debt consolidation can be applied to various types of debt, including personal loans, medical bills, and student loans, in addition to credit card debt. Consolidating multiple debts into a single payment can streamline your repayment process and make it easier to man-age your finances overall.

With highly specialized financing options for accomplished professionals, BHG Financial offers personal loans up to $200K¹ to use as you need them. With repayment terms that last up to 10 years,^1,2you can fully bring your financial plan to action by consolidating your personal debts into a simple and affordable monthly payment to help you achieve financial peace of mind sooner rather than later.

Our payment estimator can help you see your personalized estimate quickly, and our dedicated concierge service team can serve your needs every step of the way.

Debt consolidation involves combining multiple credit card debts into one new account or loan and using it to pay off your existing debts. In many cases, consolidation can save you money because the new product may come with a lower interest rate than the ones attached to your cards. Consolidating debt also simplifies the repayment process because you only need to manage one monthly payment.

Some of the most effective credit card consolidation strategies include using a debt consolidation loan or a balance transfer credit card. The best way to pay off credit card debt will depend on the amount of debt you have, your credit history, and your income level.

If you have a significant amount of high-interest debt and a respectable credit score, a lower-rate personal loan for debt consolidation can be a viable option. Debt consolidation loans, like the ones offered by BHG Financial, have flexible repayment terms1 that help keep your monthly payments low.

Do balance transfers help pay off debt faster?

Transferring your balance from one credit card to another can help you pay your debt faster, as long as the new card comes with a lower rate. If you transfer your balances to a new card with a lower APR, you can allocate a greater portion of your future payments to paying down the principal instead of the interest.

That said, there are a few things to know about the timing of balance transfer credit cards:

You can apply for a balance transfer card in a matter of minutes, but the actual transfer can take anywhere from a few days to several weeks, depending on the credit card company. During that time, you’ll still have to make any payments you owe to your original card company.
Make sure you understand how long the introductory rate lasts, whether there’s a transfer fee, and what the regular rate will be after the promotional period. Introductory rates typically run for a period of six to 18 months, and if you can’t pay off your balance in full, the new rate may be higher than the rate on your old card.

If you worry it may take longer than the intro period to pay off your debt, consider transferring your balance to a debt consolidation loan. BHG offers fixed, affordable payments with terms up to 10 years.^1,2 Plus, dedicated loan specialists provide a concierge loan experience, guiding you through the loan process.

Source: Bankrate, Investopedia - Accessed on 3/14/25
¹ Terms subject to credit approval upon completion of an application. Loan sizes, interest rates, and loan terms vary based on the applicant's credit profile.

How to pay off credit card debt FAQ

Should I pay off my credit card debt or save first?

It usually makes sense to pay off your debts before saving money, especially if you have high-interest debt. This is because the high interest rates on your accounts will often cost more than the money you can save. For this reason, any money you can afford to save is better allocated to paying off your high-interest debt so that it doesn’t continue to compound.

How can negotiating with creditors reduce my debt?

If card issuers are willing to consider negotiating your credit card debt, you may be able to set up a payment plan, pay off the cards for less than what you owe, or agree to a forbearance. However, there are definite drawbacks to negotiation, as these solutions negatively impact your credit score.

Can I pay off credit card debt without hurting my credit score?

Absolutely! Any moves you make to pay your monthly balances on time can help build a solid payment history and, in turn, improve your credit score. Plus, reducing your credit card balances will lower your credit utilization ratio.

Are debt relief programs worth it?

Debt relief (debt settlement) programs offered by for-profit companies should be viewed as a last resort, and only after you’ve exhausted options for consolidation. Debt relief companies can fast-track getting out of debt, but they often charge high upfront fees, and the process could hurt your credit score. Watch for scams and make sure you understand the potential fees before handing over your finances to a debt relief company.

What if I can't afford minimum payments?

Many creditors are willing to work with you if you cannot afford to pay the monthly minimum payment. Call the company as soon as possible to see what you can work out. If getting a debt consolidation loan isn’t an option for securing a lower minimum payment, you can contact a credit counseling agency, which will help you organize a debt management plan to pay down your debts. Debt relief programs could be considered as a last resort, as they come with drawbacks and can charge exorbitant upfront fees.

How BHG can help you pay off debt faster

At BHG Financial, we believe financing should fit seamlessly into your life and goals. That’s why we offer personal loans tailored to your needs, with amounts up to $200,000¹and flexible terms of up to 10 years.^1,2 Consolidate your high-interest debt with a BHG loan designed to help you move forward confidently.

Plus, you’ll enjoy dedicated, U.S.-based concierge service that works around your schedule—because your time is valuable. Ready to see what’s possible? Use our quick and easy payment estimator to get your personalized loan estimate in just seconds.

How Does Debt Consolidation Work?

Key Considerations

What is debt consolidation?

How does debt consolidation work?

What types of debt consolidation options are available?

What are the pros and cons of debt consolidation?

How does debt consolidation impact your credit?

Choosing a debt consolidation strategy based on life stage

Young adults

Families with kids

People nearing retirement

How does your debt-to-income ratio impact eligibility?

How can BHG Financial help with debt consolidation?

- Marie Reed

- Will

- Ada Hensley

Is BHG a good option for professionals looking to consolidate high-interest debt?

How fast can I get funding with BHG for debt consolidation?

Does BHG offer fixed or variable rates for debt consolidation?

What credit score is needed to qualify for a BHG debt consolidation loan?

How does debt consolidation work FAQ

Are there fees for debt consolidation loans?

What is the difference between debt consolidation and debt settlement?

Can I still use my credit cards after consolidating?

How long does it take to pay off consolidated debt?

Can I consolidate debt with bad credit?

Is debt consolidation a good idea for medical bills?

Will consolidating debt stop collection calls?

Key considerations

Why is credit card debt hard to pay off?

What is the debt snowball method?

What is the debt avalanche method?

How can debt consolidation help?

Consolidating personal credit card debt FAQs

What are the benefits of consolidating personal credit card debt?

How does personal debt consolidation affect your credit score?

Can I consolidate other types of debt besides credit cards?

How BHG Financial can help you consolidate personal credit card debt

Do balance transfers help pay off debt faster?

How to pay off credit card debt FAQ

Should I pay off my credit card debt or save first?

How can negotiating with creditors reduce my debt?

Can I pay off credit card debt without hurting my credit score?

Are debt relief programs worth it?

What if I can't afford minimum payments?

How BHG can help you pay off debt faster

What are the pros and cons of debt consolidation? 

How can debt consolidation help? 