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6 ways to consolidate debt

If you use your credit cards for the majority of your expenses while having difficulty paying the minimum requested on the balance at the end of the month, you are probably very tired of your financial situation and financial consolidation is a great way. to change things.

Debt consolidation is a way out of the financial maze for many in debt. This strategy makes your debts manageable and more “affordable”.

In this article, we'll explore 6 ways and strategies you can put in place to consolidate your credit card debt (and your other debts, of course).

But, above all, what is debt consolidation?

What is debt consolidation?

Debt consolidation is a financial strategy in which you pay off all your small (and large) high-interest debts with a loan (often a line of credit or personal loan) with much more favorable repayment terms, for example: a lower interest rate or lower monthly payments. You can then use the difference saved to pay off your debts more quickly.

Debt consolidation is most popular for paying off credit cards, but in some situations it's also possible to use this strategy to consolidate medical debt, student loans, or even other personal loans.

6 ways to consolidate debt
Here are 6 ways to consolidate your debts:

1. Debt management program

The purpose of a debt management plan is to allow you to draw up a financial plan to reduce your monthly payments and interest rates in order to make your payments more affordable and completely eliminate your debts in a few years.

This program is offered by a ton of private companies ranging from multinationals to small local agencies. Most of the time, the first consultation is free so you have no disadvantage to try.

Advantages of the debt management program:

  • This is not a loan, so you can exit this program at any time without financial consequences.
  • You drastically reduce the interest rate on your loans.
  •  Often the interest rate can even be below 8%, which allows you to pay off your debts more quickly.

By signing up for the program, you will stop receiving calls from debt collection agencies.

Disadvantages of debt management program:

.The program is not free. There are monthly fees associated with the debt management program.
.If you miss a payment, your lenders may remove your benefits from the program.
.Your credit rating will be negatively affected for the first few months.

For the duration of the program, you will not be allowed to have a credit card and will need to cancel any cards you currently have.

2. Refinance by credit card

Another way to consolidate debt is with interest-free credit cards. And yes, using credit cards to pay off credit cards, although it may seem counter-intuitive, it can be a great strategy.

How it works? In fact, you need to find one or more credit cards that entice you to transfer your balance from your other credit cards for a promotional interest rate of 0%.

To do this method, you absolutely must have an extremely good credit rating. The promotional period usually lasts between 12 and 18 months and is advantageous for anyone with extremely high interest rate debt.

On the other hand, you must carefully read the conditions of the new credit card, often financial institutions ask for transfer fees of up to 5%.

The goal of this strategy is to take advantage of the zero interest rate to pay off all of your debt balance without having to be crippled by interest rates.

Advantages of credit card refinancing:
It is very easy to perform.
The promotional period with the interest rate of 0% is very advantageous
Disadvantages of credit card refinancing:
You need an excellent credit score to qualify.
Once the promotional period ends, you are going to have to start paying high interest charges.
There are often balance transfer fees.

 3. Consolidate your debts with a consolidation loan

A consolidation loan is a loan that is given to an indebted individual by a bank or alternative lender to consolidate all of the individual's debts into one large loan with a lower interest rate.

Advantages of debt consolidation loan
You often save a lot of money on the difference between the two interest rates.
You only have one payment to make.
Your debt will be paid after a fixed period.
Disadvantages of debt consolidation loan
You release the balance of your credit cards/line of credit/other debts which allows you to start accumulating debts again.
You are probably going to need collateral.
You must have an average credit score.
Although banks offer debt consolidation services, getting approved by a bank is very difficult and requires a good credit rating. Individuals with poor credit ratings turn to alternative sources of loans instead, which makes comparison between institutions very complicated. This is why, with our partners, we have created an online loan comparator to make your life easier and allow you to compare all the debt consolidation options available to you.

4. Home equity line of credit

If you own a home (or any other type of property), you can take out a home equity line of credit on the amount of your mortgage you've already paid off to pay off credit card debt or any another kind of debt.

The home equity line of credit is a fixed sum with a fixed interest rate.

Since the line of credit is secured by your property, you are most likely going to have a very low interest rate on your loan. Especially if you compare it to the interest rate of a personal loan or that of a normal credit card.

Advantages of home equity line of credit:
You don't need a good credit score to qualify.
The interest rate is much lower than on other types of loans.
The repayment period is long enough to keep your monthly payments very low.
Disadvantages of home equity line of credit:
You need a mortgage with a certain amount already paid off.
If you are unable to pay the line of credit, you run the risk of losing your property.

5. Line of credit on your vehicle

If you have a vehicle that does not have a loan or whose loan is almost paid off, you can also take out a line of credit on its value using your vehicle as collateral.

You can then use that money to pay off all your debts and take advantage of the lower interest rate on a car loan to save money on the interest rate while being able to pay off a larger amount each month.

6. Borrow from a friend or family member

Loans between two individuals without an intermediary are also a good debt consolidation option for someone. If you can convince a financially affluent friend or family member to lend you some money so that you can consolidate your debts, you can save a gigantic amount on interest rates since you will most likely have a d'ami” and, in addition, your payment methods can be very flexible.

However, be careful, this type of loan can affect the relationship between the person who lends his money and the one who borrows it. That's why it's most likely a good idea to have a written contract to make sure both sides are on the same page.

Advantages of personal loans between friends/family members

  • The interest rate that your friend or family member will offer you can be very advantageous. Even that it is possible that no interest is requested.
  • Payment terms will be very flexible.
  • Your credit rating does not matter in the process and will not be affected in any way.
  • You don't have to go through an intermediary.
  • Disadvantages of personal loans between friends/family members
  • Your relationship with the lender can be seriously damaged if you do not make payments on time or do not meet pre-established conditions.


Credit cards, lines of credit and student loans are very interesting and above all very useful financial products for our society. But, sometimes, with a bad budget, a sudden change in our income or any other such problem, it can seriously affect our ability to pay off the debts we have accumulated. And it's no secret that battling against often huge interest rates can make us feel like we're constantly drowning.

If this is your case, we strongly advise you to study the possibility of consolidating your debts.

If you don't know where to start, we strongly advise you to take a look at our quick, free and, above all, super effective loan comparison tool.