Consolidate Credit Card Debt on Your Own

Two do-it-yourself credit card consolidation options that may work for you.

Credit card consolidation doesn’t always require professional assistance like credit counseling in order for you to get ahead and regain control. In some cases, you may be able to consolidate credit card debt on your own, if you have the right credit score and budget plan. You just have to be careful that you can keep up with a do-it-yourself solution to avoid making a challenging situation even more difficult.

The information below guides you through two options for consolidating credit card debt on your own. If you have questions or think you’d be more comfortable getting a professional opinion on which solution is best in your financial situation, we can help. Call Consolidated Credit today at or complete an online application to request a confidential debt and budget evaluation from a certified credit counselor.

DIY option 1: Credit card balance transfers

The first option for consolidating credit cards on your own is to use a credit card balance transfer. It may seem counterintuitive that the solution to your challenges with credit card debt is to get another credit card, but here’s how it works:

  1. Before consolidation, your unsecured debt is spread out between multiple high-interest credit cards so you have a number of monthly payments to make, all of which accrue interest each month you carry a balance over.
  2. If you have a good credit score or better, you can qualify for a new credit card a 0% APR introductory period on balance transfers. The introductory typically applies for a period of 12 to 24 months.
  3. You can look on credit card comparison websites for “balance transfer credit cards” to find the best card for your needs – the longer the introductory period of 0% APR the better, but also be careful of high balance transfer fees.
  4. You get the new card then transfer the balances from your other credit cards to the new one. As mentioned, there is usually a balance transfer fee applied to each transfer you do. A 3% transfer fee is standard.
  5. With the transfer fees applied, you increase the total debt you have to repay at least slightly, but you don’t have to worry interest charges for one to two years as long as the introductory period is in effect.
  6. During that time, 100% of every payment you make goes to eliminating your debt instead of a large portion of it being used to cover interest charges that accrue each month.
  7. Ideally, you want to calculate strategically and make big enough payments each month to ensure you eliminate the balance in-full before the introductory period ends – don’t make minimum payments, because you won’t eliminate the debt quickly enough!
  8. Any balance left after the introductory period would incur monthly interest charges, since the standard APR for balance transfers on the credit card will go into effect. You can check your card agreement or credit card statement for the new applied APR.

A few words of warning on balance transfers: Balance transfers don’t work for everyone. If you don’t have a good credit score then you may not qualify for a balance transfer credit card with a 0% APR introductory rate OR you’ll qualify, but the introductory period won’t be long enough to eliminate all of your debt in time. Also, take time to calculate how much the balance transfer fees will increase your debt and watch out for other fees that may make paying everything back a little tougher.

DIY option 2: Personal debt consolidation loan

The second option for consolidating credit card debt is to use a personal consolidation loan. This option offers some benefits that may make it the better option, depending on your situation. For example, you can pay off other debts besides your credit cards with the money you receive from the loan, such as medical bills. So if your unsecured debt load is made up of more than just credit card debt, it can provide some additional benefits.

Here’s how it works:

  1. If you have at least a good credit score, you can go to your bank, credit union or preferred lender to ask for an unsecured personal loan that you will use to consolidate debt.
  2. Make sure the loan amount you ask for is enough to pay off all of your unsecured debts.
  3. Ask for a term (the length of time on a loan) that will give you a monthly payment you can make comfortably within the limitations of your budget. In most cases, you want this term to be five years or less.
  4. The lender will check your credit to see if you qualify for the loan at the terms you want AND what interest rate will be applied to the debt.
  5. Ideally, you want the rate to be around 5%, but anything less than 10% will usually be good enough to provide the benefits from consolidation you need.
  6. Once you’re approved and complete the paperwork, the lender will either disburse the money into your account or send disbursements directly to each creditor.
  7. As the disbursements are received by your creditors, you zero out each balance and pay off any other debts like medical bills that you may have.
  8. This means that the loan ends up being the only debt you have to pay off once your credit card debts have been paid in-full.

A few words of warning on consolidation loans: First and foremost, only use unsecured personal loans to consolidate credit card debt; secured versions like home equity loans put your assets at risk unnecessarily. Also know that if the lender calculates your debt-to-income ratio with the loan and it’s too high, they won’t give the money to you – instead you’ll be required to sign off that they give it directly to your creditors (known as direct disbursement).

Avoiding common DIY consolidation traps

The biggest and most common trap that people face when they consolidate their credit cards on their own is that they fail to pay off the consolidated debt before they return to making charges on their credit cards. This can be really dangerous and start you on a path where you potentially make your situation worse.

Think of it this way – you consolidate credit cards to lower your payments and make it easier to pay off your debt. You reduce your obligations to one bill that works for you budget with lower interest that allows you to pay off your debt quickly. But if you start charging on your high-interest credit cards again, then you’ll have multiple obligations to pay back again. You won’t be able to make as big of payments on the consolidated debt because your financial attention will be split again.

As a result, if you start charging your credit cards again you can end up with more debt than you had before you consolidated. And realize that those zero balances on your credit cards can be really tempting when you’re out shopping and see something you want or have an unexpected expense that you can’t cover in your budget.

So you have to be diligent about changing your financial habits when you consolidate on your own to avoid this trap. This means you have to:

  • Create a budget that allows you to save money and set it aside in an emergency fund so you have funds to cover emergencies and unexpected expenses in cash without relying on a credit card.
  • Find ways to control the impulse to use credit to buy things you want when you see them
  • Resist the urge to charge and overspend at big events like holidays or birthdays in order to make them special

The other biggest trap in consolidation is that you agree to rates or terms on the consolidated debt that aren’t favorable to you. If the interest rate is too high or the term too long on your consolidated debt, then you either won’t be able to complete your DIY consolidation plan successfully or it will take too long and you’ll end up paying more interest, in total, rather than less. In other words, your debt ends up costing you more money.

If you can’t consolidate credit cards on your own with an interest rate under 10% at the most or pay off your total debt within five years or less, then you may want to consider another option for debt relief. Your next stop should be to seek the help of a certified credit counseling agency. You may qualify to consolidate your debt through a debt management program, which may reduce your total monthly payments by 30-50% and give you a plan to pay off your debt within 3-5 years.