If you consolidate credit card debt on your own may be a good idea. You should start by gathering the interest rate and balance information for all your cards. Then develop a plan that best pays down your balances. 

  • You should not carry a balance on your cards if you are able 
  • Consolidation drops your score in the short term 
  • Whether you should pay off your cards or consolidate depends on how much debt you have 

If you have high-interest loans and have trouble making minimum payments, you should consider consolidating.  

How Much Credit Card Debt is Too Much? 

How much is too much is a matter of personal comfort. There are a couple of guides that financial planners use to indicate if your balances are too high:1  

  • Utilization – Don’t use more than 30% of your available credit. Beyond that, it starts to affect you. 
  • Debt-to-income ratio – don’t let more than 36% of your pre-tax income going to pay interest. 

These are indicators for if you can sustain the balances, not whether it is too much. We believe that credit cards should be used for emergencies, and you should pay them off each month and not carry a balance. In other words, any revolving debt is too much. 

Revolving Debt Average Per Household 

Statistics about how much the average person has varies by who accumulates the data. This is because banks compile surveys of their customers and release their findings, so it’s hard to find a definitive number. The findings range from $5,700 – $7,600 per household.  

How Much Savings When You Consolidate Credit Card Debt

How much you will save when you consolidate credit card debt depends on how much you have and how high the interest rate is. When you have don’t have much to pay off, then it’s better to use a snowball method. You may have more than you can pay off, though, even with reduced payments. Then, you should talk to a credit counselor about getting debt relief. You should consolidate when:

  • You qualify for a 0% card or low-interest loan  
  • Total debt, excluding mortgage, isn’t over 40% of your income 
  • You aren’t behind on any of your payments 

Finally, plan how you will pay it off and not let it happen again. Can you pay it all off in 6 months to a year? Then maybe getting a card with a 0% introductory rate works. Make sure you pay it off during that time period, though, or you will pay high interest again. If you have more debt or can’t pay it off in that short a time, then get a consolidation loan with a low rate.2  

Is Consolidating Bad for Your Credit? 

Initially, consolidation may lower your scores. Over time, though, wise money management always improves them. Here are some factors that affect your scores in the beginning: 

  • New applications drop your score 
  • Opening a new account also drops it 
  • Moving balances from an older account to the new with no history lowers it 
  • Lower credit utilization helps it 
  • Improved payment history helps it 

This strategy has several parts that affect your score, but the overall effect is to take it down a little bit in the beginning. If you can lower your bills and pay them off easier you should do it, though.3  

Without Hurting Your Credit 

There is no true consolidation that won’t negatively affect your score because you apply and open new accounts. An alternative is the snowball approach we mentioned earlier. This method takes personal discipline.  

  • List all your cards in a table or spreadsheet with their interest rates and balances 
  • Based on the data figure out which is the easiest to pay off first 
  • Pay the minimum on the others and concentrate on paying off that one 
  • Once that is zeroed move on to the next easiest 
  • Keep paying off one at a time 

This isn’t a true debt consolidation, but it is a good method for paying off debt, and it won’t hurt your credit score. 

Consolidate With Bad Credit 

If you have bad credit it limits your ability to get a low-interest loan, but there are options better than paying the minimum on your cards. Here some ideas to explore: 

  • Your local credit union may offer better terms than a big bank. They can be more flexible, and they often have programs for people in your situation. 
  • Online lenders as also more flexible than traditional banks, but you must shop around for good terms. 

Watch out for predatory lenders online, though. Take your time and look at the terms of each loan. Some good places to start are Lending ClubUpstart, and Avant.4  

Pay Off or Consolidate Credit Card Debt

It is always best to pay off balances when you can. Sometimes, though it isn’t practical. The snowball approach is a good plan for a number of reasons. It builds your financial discipline, gives you a sense of accomplishment as you pay off accounts, and doesn’t damage your credit. 

If you have trouble making your minimum payments, though, the snowball may not be a practical option. On the other hand, if you aren’t, but you can only make minimum payments then consolidation may be your best choice. Finally, if you are behind already and can’t make minimum payments, you should sit down with a credit counselor and discuss more aggressive strategies. 


  1. SoFi.com 
  2. Nerd Wallet 
  3. Credit Karma 
  4. Bankrate