Best Debt Consolidation Loans of February 2025

Many people struggle with debt at one point or another. It may be the result of bad luck, like a job loss or unexpected medical bill, or the result of chronic overspending.

But regardless of how you found your way into debt, rest assured you can find your way out. And one of the most effective tools for doing so is a debt consolidation loan.

Debt consolidation loans are a particularly smart choice for consolidating high-interest debt, like credit cards, and are sometimes called credit card consolidation loans. They’re not an option for secured debt, like auto loans.

You don’t need perfect credit to apply. Most lenders look at a combination of credit score, credit history, existing debt and income, and there are loan options for bad-credit borrowers (borrowers with a score of 629 or lower).

Once you’re approved, you can use the debt consolidation loan to pay off all your debts at once, then pay back the new loan in fixed monthly installments until you’re officially debt-free.

» MORE: How do debt consolidation loans work?

According to our annual analysis, a household with revolving credit card debt owes over $10,000 on average. Let’s play out this scenario with a debt consolidation loan.

If you have $10,000 in credit card debt, spread out across four different credit cards, you’re likely paying an average annual percentage rate of about 23%.

If you’re making a minimum payment of $75 on each card, at 23% APR, it will take you four and a half years to be debt-free and cost an extra $6,200 in interest, on top of the original debt.

But if you pay off all your credit cards at once using a $10,000 debt consolidation loan, at 15% APR, you’ll save $2,841 on interest – and you’ll get out of debt six months sooner.

Not sure how much debt you have? You can use our free debt consolidation calculator to plug in all of your credit card balances, interest rates and monthly payments in one place. Plus, see what you can save by taking out a debt consolidation loan.

"A new year always feels like a fresh start, so it’s a good time to get serious about your credit card debt. Consolidation is a solid payoff strategy, and though there are a few different ways to go about it, I’d recommend either a 0% balance transfer card or a debt consolidation loan.

A balance transfer card lets you pay off your credit cards with no interest during the promotional period, but it’s a bit harder to qualify for since you need good credit. Debt consolidation loans are an option even if you have bad credit, and they have longer terms, which is super helpful if you have a lot of credit card debt to tackle.”

— Jackie Veling, Lead Writer on Debt Consolidation

» MORE: 5 best ways to consolidate credit card debt

A debt consolidation loan is a good idea when you can get a lower annual percentage rate than what you're currently paying on your credit cards or other debts. Like with all financial decisions, carefully weigh the pros and cons of consolidating your debts before you apply for a debt consolidation loan.

» MORE: The pros and cons of debt consolidation

Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified through NerdWallet from January 1, 2025, through January 31, 2025, and chose credit card consolidation or debt consolidation as their loan purpose. Rates are estimates only and not specific to any lender. The lowest credit scores — usually below 500 — are unlikely to qualify. Information in this table applies only to lenders with maximum APRs below 36%.

You’ve probably heard that rates are high right now, and while that’s true, they may be on their way down.

On December 18, 2024, the Federal Reserve cut the federal funds rate by a quarter point – its third and final cut of the year — and predicted two additional cuts for 2025. These reductions will likely lead to lower interest rates on debt consolidation loans, though it’s hard to say by how much, since debt consolidation loans are fixed-rate, meaning their rates aren’t as volatile as other types of credit like mortgage loans.

Instead of trying to time your application perfectly, it’s best not to delay getting out of debt. That’s because lenders look at multiple factors when determining your rate, and the overall rate environment may have little effect on what rate you specifically get. Plus, continuing to carry high-interest debt like credit cards will only cost you in the long run.

Look specifically for lenders that let you pre-qualify with a soft credit check — that way you can check if you meet the lender’s requirements without taking a hit to your credit score. This will help you see if the rate you qualify for is lower than your existing debts.

Some online lenders specifically offer debt consolidation loans for borrowers with bad credit. If you’re not sure where to begin, your local credit union is also a good first stop.

» COMPARE: Best debt consolidation loans for bad credit