Best Personal Loans for Credit Card Refinance | Find the Best Loan for You

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Consolidation loans could save you money by offering lower interest rates for paying off credit card debt.

Refinancing credit cards using a personal loan can offer a lifeline for paying off credit card debt at a lower interest rate. The trick is finding a loan to pay off credit cards that will save you money.

“If you don’t qualify for one of the top balance transfer credit cards, using a personal loan to consolidate debt is an excellent option. A loan gives you an opportunity to pay off your debt at a lower interest rate,” says Beverly Harzog, best-selling author, credit card expert and consumer finance analyst at U.S. News.

Here’s how you can find the best loan with the most favorable terms that you have the best odds of qualifying for.

What Is the Best Interest Rate on a Personal Loan?

When you shop around for the best personal loan interest rate, you can save. Compare your personal loan offers with national average trends for personal loans to know if you’ve found a good deal.

The average personal loan rate is 10.84%. Last week’s average rate was 10.84%.

*Rate as of June 10, 2020.

What Are the Best Credit Card Debt Consolidation Loans?

  • LightStream: Best lender for loans with a co-signer option.

  • SoFi: Best lender for loans of up to $100,000.

  • Marcus by Goldman Sachs: Best lender with no loan fees.

  • Discover: Best lender for long loan terms.

  • Prosper: Best lender for up to a 50% debt-to-income ratio.

  • Upstart: Best lender with a low minimum loan amount.

Best lender for loans with a co-signer option.

Launched as a division of SunTrust Bank in 2013, LightStream offers personal loans of up to $100,000. Co-signers are accepted.

  • Minimum FICO score: N/A
  • Maximum debt-to-income ratio: N/A
  • Co-signer option: N/A
  • Preapproval or rate quotes available: N/A
  • Loan amounts: $5,000 to $100,000
  • Loan terms: N/A
  • Loan use restrictions: Funds must be used for approved loan purpose
  • Discounts: None
  • Origination fee: N/A

Best Features

  • More than 30 different loan uses are available.

  • Loans of up to $100,000 are available.

  • LightStream has no origination, prepayment or late fees.

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Best lender for loans of up to $100,000.

SoFi has offered personal loans online since 2011. Borrowers can apply for fixed and variable-rate personal loans ranging from $5,000 to $100,000.

  • Minimum FICO score: 680
  • Max DTI: N/A
  • Co-signer option: Accepts co-borrowers
  • Preapproval or rate quotes available: Yes
  • Loan amounts: $5,000 to $100,000
  • Loan terms: 2 to 7 years
  • Loan use restrictions: Borrowers can only use SoFi Personal Loans for credit card debt consolidation, home improvements, relocation assistance, and medical expenses.
  • Discounts: 0.25% discount on your interest rate if you sign up for AutoPay
  • Origination fee: None

Best Features

  • Offers no-fee loans, including no late fees.

  • Loans of up to $100,000 available.

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Best lender with no loan fees.

Borrowers can apply for fixed-rate unsecured personal loans with Marcus by Goldman Sachs. Personal loans with this lender have no origination, prepayment or late fees.

  • Minimum FICO score: Not disclosed
  • Maximum debt-to-income ratio: Not disclosed
  • Co-signer option: No
  • Preapproval or rate quotes available: Not disclosed
  • Loan amounts: $3,500 to $40,000
  • Loan terms: 36 months to 72 months
  • Loan use restrictions: Only debt consolidation, home improvement, major purchases, special occasions, moving and relocation and vacations
  • Discounts: N/A
  • Origination fee: None

Best Features

  • Marcus does not charge any fees on its personal loans.

  • Borrowers can adjust their payment due date.

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Best lender for long loan terms.

Discover offers personal loans for debt consolidation, home improvement and major purchases. Loan terms from three to seven years are available.

  • Minimum FICO score: 660
  • Maximum debt-to-income ratio: N/A
  • Co-signer option: No
  • Preapproval or rate quotes available: Rate check available
  • Loan amounts: $2,500 to $35,000
  • Loan terms: 36 months to 84 months
  • Loan use restrictions: Only debt consolidation, home repairs/improvements, unexpected expenses or major purchases.
  • Discounts: N/A
  • Origination fee: None

Best Features

  • Discover has no fees other than a late fee.

  • Customizable loan terms from 36 to 84 months.

  • Borrowers get free access to their FICO credit score.

See full profile

Best lender for up to a 50% debt-to-income ratio.

Prosper has served more than 880,000 borrowers since its founding in 2005. Borrowers with a debt-to-income ratio of up to 50% may be approved for personal loans.

  • Minimum FICO score: N/A
  • Maximum debt-to-income ratio: N/A
  • Co-signer option: N/A
  • Preapproval or rate quotes available: N/A
  • Loan amounts: $2,000 to $40,000
  • Loan terms: 5 years
  • Loan use restrictions: N/A
  • Discounts: N/A
  • Origination fee: N/A

Best Features

  • Loans are available to people with fair to excellent credit.

  • Prosper offers preapproval with a soft credit check.

  • Small-dollar loans of $2,000 or more are available.

See full profile

Best lender with a low minimum loan amount.

Upstart uses automation to originate credit, funding more than $3.2 billion to 250,000 borrowers. Loans as small as $1,000 are available with this lender.

  • Minimum FICO score: 620
  • Maximum debt-to-income ratio: Not disclosed
  • Co-signer option: No
  • Preapproval or rate quotes available: Yes
  • Loan amounts: $1,000 to $50,000
  • Loan terms: 3 to 5 years
  • Loan use restrictions: Loan funds may not be used for any prohibited uses noted in Upstart’s Acceptable Use Policy.
  • Discounts: N/A
  • Origination fee: 0% to 8%

Best Features

  • Upstart may accept applicants with fair credit or even those with no credit history, using artificial intelligence to quantify risk.

See full profile

Personal Loan Finder

Select your desired loan amount and loan purpose, your credit score range, and your state to see estimated annual percentage rates and loan terms.

What Is Credit Card Debt Consolidation?

Credit card debt consolidation rolls multiple credit card balances into one loan.

The idea is that you borrow a lump sum of money, ideally at a low fixed interest rate. You then use that money to pay off some or all of your high-interest credit card balances.

Taking out a personal loan for the purpose of debt consolidation is a viable option for consumers who have substantial credit card debt, says Mark Victoria, head of personal lending at TD Bank. Going forward, you’d have a single payment to make each month toward the debt consolidation loan.

Credit card debt consolidation can offer several financial benefits:

  • You could save money on interest. If your consolidation loan has a lower interest rate than the annual percentage rate for the credit cards you pay off, you’ll pay less interest over time.
  • There are fewer payments to juggle. Going from multiple credit card payments each month to a single monthly payment can help streamline your financial life.
  • You may get out of debt faster. If you have a lower rate with a credit card debt consolidation loan, more of your payment goes toward the principal each month.

There’s also a sense of relief. Debt consolidation gives you a concrete finish line when you know your debt will be paid off, says James Lambridis, founder and CEO of financial information site DebtMD. “An unsecured debt consolidation loan typically lasts from two to five years, so you can give yourself peace of mind that at the end of the term, you will be debt-free once and for all.”

Are Credit Card Debt Consolidation Loans Better Than Balance Transfer Cards?

You can use a balance transfer credit card to consolidate credit card debt at a 0% interest rate. But balance transfer cards can be more limited than debt consolidation loans.

You may not be approved for a high enough credit limit to cover all of your credit card balances. You should expect to pay a balance transfer fee, though this fee may be lower than the interest rate on a personal loan. Most balance transfer cards offer 0% interest for 12 to 18 months, which is a shorter term than the typical personal loan.

Balance transfer cards are best suited for consolidating small credit card balances that you can pay off within the 0% promotional period. Personal loans can be a better solution for larger debt than you can expect to be approved for on a credit card and may take more time to pay off.

Do Debt Consolidation Loans Hurt Your Credit Score?

Consolidating credit card debts using a personal loan can affect your credit score both positively and negatively. However, successfully paying off credit card debt using a personal loan should have a more positive than negative effect on your credit.

Applying for a loan to consolidate debt can trigger a hard inquiry against your credit report. Hard credit inquiries can take a few points off your credit score, so it’s important to be selective when applying for a consolidation loan. Most lenders allow you to check your rate and loan amount with a soft inquiry, which doesn’t affect your credit. Rate checks allow you to shop around for the best option before you submit a formal application, which does trigger a hard inquiry.

Once you have a new loan open, that can affect the overall age of your credit. As a general rule, the older your account history, the better. Newer accounts can cause a slight re-aging, which could trim a few points off your score.

But inquiries and credit age are smaller factors than payment history and credit utilization, which a personal loan for credit card refinancing can help with.

If you’re paying off credit cards, that can improve your credit utilization ratio, which counts for 30% of your FICO credit score. Credit utilization ratio is the percentage of your available credit limit you’re using at any given time. Using 30% or less of your credit line is recommended.

At the same time, you can continue building a positive payment history by paying your new loan on time. Payment history accounts for 35% of your FICO credit score.

But improving your credit score with a better credit utilization ratio and maintaining a positive payment history assumes you’re sticking to the plan of paying off your balances. The two biggest mistakes to avoid with credit card debt consolidation loans are paying late and running up new balances on the cards you just paid off. Doing so can hurt your credit score and push you farther into debt.

Victoria says some people go in with the best intentions of consolidating into one loan at a lower rate. However, even though the debt has shifted, consumers should keep in mind that they still likely have access to the credit cards that got them there in the first place.

“Consolidating is the first step,” he says. “Changing spending habits should be the next priority.”

What Is the Best Loan to Pay Off Credit Cards?

If you’re interested in the best credit card debt consolidation loans, it helps to know how to compare them. As you’re shopping around for a personal loan to eliminate credit card debt, consider these factors:

  • Minimum and maximum borrowing amounts.
  • Minimum and maximum loan repayment terms.
  • Interest rate and annual percentage rate.
  • Loan fees, including origination fees, late payment fees and prepayment penalties.
  • Minimum credit score and income requirements.

When looking for the best credit card debt consolidation options, it’s important to figure out what works best for your budget. So that also means taking into account what your new monthly payment would be for a loan. Understand how long it will take you to pay it off and what you’ll pay in interest.

“You should only consolidate your debt if you’re able to lock yourself in at a lower interest rate and/or lower your monthly payment,” Lambridis says. He cautions that a lower credit score could translate to a higher interest rate on a consolidation loan, potentially overriding any savings benefit.

Other debt consolidation loans for credit card refinancing include home equity loans and 401(k) loans. These options can be problematic, as you risk losing your home or retirement savings if you default.

Advertising Disclosure: Some of the loan offers on this site are from companies
who are advertising clients of U.S. News. Advertising considerations may impact
where offers appear on the site but do not affect any editorial decisions,
such as which loan products we write about and how we evaluate them. This site
does not include all loan companies or all loan offers available in the marketplace.

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