Debt Consolidation: Is It Right For Me?

Struggling to manage your debts and juggle multiple monthly payments, but not sure where to even begin? We’re here to help by giving you the answer that may solve your debt woes: debt consolidation.

Debt consolidation is simply the process of combining several of your debts—typically high-interest debt like credit cards—into a single payment.

Debt consolidation can be a good choice if you just want to reorganize multiple bills that have different payments, due dates, and interest rates. The ultimate goal is to pay less interest and/or get out of high-interest debt sooner than if you’d stayed the course with multiple lenders and payments.

Is debt consolidation right for me

To determine whether debt consolidation is the right move for you, it’s important to consider your financial situation and the options available to you for debt consolidation.

Debt consolidation may be right for you if:

You have the means to either pay off your loans over a longer period of time or make larger payments over a shorter loan term
Your credit score has gone up since your original loan—making it more likely you’ll qualify for a better interest rate
You’re focused on keeping your spending in check and committing to a plan to avoid falling into more debt

It might not be the best option for you right now if:

You aren’t able to change your spending habits
Your credit isn’t currently strong enough for a good interest rate (Although some lenders and lending platforms, like Upstart, consider factors beyond your creditworthiness to fairly price credit!)
Your current debt is small and can be paid off quickly

Debt consolidation options that may be available to you

Home equity loans and home equity lines of credit

A home equity loan (HEL) is essentially a second mortgage or cash-out refinance of a first mortgage that uses the available equity in your home to pay off debt. This type of loan is secured—meaning your house is your collateral—so you can usually get lower interest rates and longer repayment terms.

Lenders may also offer a home equity line of credit (HELOC), which allows you to draw the amount of cash you need when you need it. A HELOC acts similar to a credit card with revolving debt. It’s important to note that a HELOC typically comes with a variable interest rate that may go up or down throughout the life of the loan.

Debt consolidation loans

What is a debt consolidation loan? A debt consolidation loan combines your different debts under a single account with a single payment. Otherwise known as a personal loan (which may be used for situations other than debt consolidation), they’re offered by places like banks, credit unions, and online lenders.

Debt consolidation loans are typically unsecured, so they don’t require collateral, only your promise to repay. Secured loans require collateral—such as your home—and are often an option if a borrower has a hard time getting approved for an affordable unsecured loan.

When considering this type of loan, be sure to examine all the terms and fees, as it could end up increasing the amount you pay back.

Balance transfer credit cards

Balance transfer credit cards are often used to consolidate credit card debt. They shift this debt from one or more cards to new single card, usually with a tempting introductory APR. However, once this period is over, the cards typically move to high APRs, which may defeat the purpose of getting yourself out of high-interest debt. Make sure you understand the terms of your new card and when and how it will begin charging you interest. Be wary of balance transfer fees and check to see if any new purchases on the card fall under the promotional interest rate.

Before following through with a balance transfer card, check the card’s limit. Which debts are you transferring? The credit limit on a potential new card may be lower than your combined debts, which might not make much sense for you if you’re trying to consolidate your debt into one payment.

While weighing whether debt consolidation is the right move for you, you’ll need to consider the benefits and drawbacks of consolidating your debt and how your financial situation factors into your decision.

What are the benefits of debt consolidation?

Saves money. With the right loan terms, you can pay off your debt faster and save money on interest if you qualify for a lower rate.
Makes budgeting easier. When you have multiple credit card bills to manage, it can be easy to miss one—but even just missing one can leave a mark on your credit report. Consolidation lets you roll multiple monthly payments into one, making it easier for you.
Lower monthly payments. While you could pay your debt off faster with consolidation, a longer loan term with lower payments is also an option that will give you more funds in your budget in the short term. Just remember that you’ll pay more in interest over the life of the loan if you choose this option.
Improved credit score. Did you know that your bill payment history isn’t the only factor that affects your credit score? Your credit utilization ratio—how much credit you’re using compared to how much is available to you—can account for up to 30% of your credit score. Consolidating your debt can help you pay your existing debt and open the door for new credit opportunities, thus lowering your credit utilization.

What are the drawbacks of debt consolidation?

Fees. Lenders may charge closing fees, loan origination, and balance transfer fees.
Collateral. If you opt to consolidate your debt into a secured loan, you may need to offer up an item that you own like your home, boat or car as collateral to back up the loan.
No guaranteed lower interest rate. Consolidation doesn’t automatically mean a lower interest rate. This depends on the state of the market and your credit score.
Debt may return. Debt consolidation won’t help you manage your everyday money habits. So, if you don’t address the reasons you got into debt in the first place, your debt may return or even grow.

How to get started with debt consolidation

Think you might be ready to make the jump into debt consolidation? A few items you should check off first before you look into applying for a loan or balance-transfer card:

Check your credit score and credit reports. Review your credit reports at annualcreditreport.com. Look for any inaccuracies that may affect your score and file a dispute with the reporting agencies to get them removed.
Review your budget. The monthly payment you can afford will inform the interest rate and length of a new loan or whether a balance-transfer card is the right move for you once your introductory interest rate is over.
Compare options and consider these variables:
1. Are there fees?
2. Are you able to get prequalified?
3. Is the interest rate fixed or variable?
4. Are you able to get the amount you need? Some lenders have loan minimums and a balance-transfer card may not have a limit high enough for your debts.

Bottom line

Debt consolidation could be exactly what you need if you’re open to addressing multiple high-interest debts and are open to sticking to a debt management plan. To get started, check out what Upstart has to offer.

Upstart Network, Inc. (NMLS #936133) is not a lender. All loans on its marketplace are made by regulated financial institutions.

All mortgage lending is conducted by Upstart Mortgage, LLC dba Upstart Home Lending. (NMLS #2443873). Equal Housing Opportunity.

Checking your rate won’t affect your credit score: When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information may be reported to the credit bureaus.
Upstart’s model considers education: Neither Upstart nor its lending partners have a minimum educational attainment requirement in order to be eligible for a loan.
41% more approvals and 33% lower rates than a traditional model: As of publication in April 2026, and based on a comparison between the Upstart model and a hypothetical traditional model using Upstart data from Jan – Dec 2025. For more information on the methodology behind this study, please see Upstart’s Annual Access to Credit results here.
Unsecured Loans: While most loans through Upstart are unsecured, certain lenders may place a lien on other accounts you hold with the same institution. There may be an option to secure your personal loan through Upstart with your vehicle, which will require a lien to be placed on the vehicle. It is important to review your promissory note for these details before accepting your loan.
Loan amounts from $1,000 -$75,000: Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Minimum loan amounts vary by state: GA ($3,100), HI ($1,500), MA ($7,000). Maximum loan amounts may vary by state.
Closing and funding timeline: In April 2026, 10% of funded HELOCs achieved a closing timeline of 2 days or less and a funding timeline of 7 days or less. This timeline assumes consumers close with our remote online notary, provide supporting documentation promptly, and ensure the information provided is accurate and consistent with our verification process. Delays, discrepancies, and other unforeseen factors may impact the closing timeline. MBA’s 2025 Home Lending Study reports an average industry closing time of 37 days.
APRs from 6.2% – 35.99%, with 3 or 5 year terms: The full range of available rates varies by state. The lowest rates are only available to the most qualified applicants. A representative example of payment terms for an unsecured Personal Loan is as follows: a borrower receives a loan of $10,000 for a term of 60 months, with an interest rate of 17.50% and a 7.25% origination fee of $725, for an APR of 21.23%. In this example, the borrower will receive $9275 and will make 60 monthly payments of $252. APR is calculated based on 5-year rates offered in March 2026. There is no downpayment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
Instant deposits: To receive instant funding, your bank account must support instant transfers. If your account does not support instant transfers, funds will be available to you depending on your bank’s transaction processing time and policies.
Always On Commitment: We are committed to maintaining your credit limit as long as you continue to meet program eligibility and account requirements. To ensure the safety and security of all our members, we reserve the right to adjust or close lines in specific circumstances, including account default or late payments, suspected fraud, violation of our terms of service (including abusive behavior), or when necessitated by legal or regulatory requirements.
Cash Line draws: You may request a draw at any time. Only one draw may be outstanding at a time; after it is fully repaid, you may request another.
HELOC APRs as low as 6.52%: Terms shown here are subject to change without notice. APRs for initial advances range from 6.52% to 18.00% based on rates offered as of April 2026. The lowest rate is only available to consumers willing to become a member of a credit union and to those who meet a minimum FICO score of 780, CLTV under 70%, and DTI under 45%. Your actual rate will depend on many factors such as your credit history, combined loan-to-value ratio (CLTV), line amount, loan term, lien position, and property state. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
No annual fee, prepayment penalty, or fees to redraw: Terms shown here are subject to change without notice. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
2,500+ Variables:As of 3/31/2026. “Variables,” often also referred to as “features,” refers to raw variables and combined variables considered in our AI models. A “raw” variable is a non-combined, conceptually distinct unit of data, such as “applicant-reported savings.” A “combined” variable is data that has been transformed, combined, or otherwise engineered from a raw variable or set of raw variables, such as “applicant-reported savings” divided by “loan amount.
Fully automated loans: In Q2 2026. Percentage of Loans Fully Automated, which is defined as the total number of loans in a given period originated end-to-end (from initial rate request to final funding for personal loans and small dollar loans, and from initial rate request to signing of the loan agreement for auto loans) with no human involvement required by the Company divided by the Transaction Volume, Number of Loans in the same period.