5 signs you should consolidate your credit card debt in 2024

Last summer marked a new high for Americans’ total credit card debt, with balances passing $1 trillion for the first time in history, according to the Federal Reserve Bank of New York.

This type of debt can feel uniquely stressful, like something you can’t get ahead of no matter how hard you try. Though there’s no quick fix, consolidation can be a smart financial strategy that simplifies your debts and lowers the amount of interest you pay.

Here are five signs that consolidation may be the right financial move.

1. You have a pretty good credit score

Your credit score is one of the most important factors when consolidating credit card debt, because strong credit will help you qualify for a debt consolidation product.

Tiffany Johnson, a certified financial planner based in Athens, Georgia, says the first step she takes with her clients is to have them pull their credit reports from the three major credit bureaus (Experian, Equifax and TransUnion).

“If they have a reasonable credit score, I would say at least 600, that's when we'll start looking at debt consolidation options for them,” she says.

2. You’re juggling multiple credit card balances

If you’re struggling to wrangle many balances, consolidating can help because it combines multiple debts into one, usually via a balance transfer card or a debt consolidation loan.

With a balance transfer, you roll all of your credit card debts onto the balance transfer card, so you’re left with only one balance. If you go with a debt consolidation loan, you use the loan funds to pay off your credit cards, leaving you with just the monthly payment on the loan.

This can make a pile of unruly debts seem more manageable.

3. You’re making minimum monthly payments, but seeing no progress

If you feel like you can’t get out from under your credit card debt, that’s because you’re not just dealing with the debt itself, but also the interest that accumulates when you carry a balance.

Consolidation can help break the high-interest trap, especially if you go with a balance transfer card, since these cards have zero-interest promotional periods that can last up to 21 months. You’ll pay no interest during this time even if you carry a balance.

Debt consolidation loans do charge interest, but if you qualify for a lower interest rate than the average rate across your credit cards, you’ll still save money.

4. You’re motivated by a clear finish line

The psychology behind paying off debt is just as important as the logistics, says Allison Sanka, an accredited financial counselor based in Berwyn, Pennsylvania.

If you prefer knowing an exact date you’ll be out of debt, consolidation can give you a clear endpoint, particularly if you go with a debt consolidation loan.

But a loan isn’t the only option. Sanka says most of her clients have success without consolidating by using the snowball or avalanche methods, in which you tackle debts one by one, starting with either the smallest debt (snowball) or the one with the highest interest rate (avalanche).

5. You’ve gotten to the root of your debt

Both Sanka and Johnson emphasize addressing the origin of your debt before consolidating. If you skip this step, consolidation won’t matter since you’ll likely find yourself in debt again, they say.

Sanka recommends working backward to figure out what led to your debt in the first place. For example, if you struggle to manage unexpected expenses, it’s important to build up an emergency fund.

Johnson advises clients to not use their credit cards for discretionary expenses like eating out since those costs vary month to month. Instead, tie fixed expenses to your credit card so that you're charged the same amount each month.

“You just need something to keep you off the hamster wheel of using the credit card for everything that comes your way,” Sanka says.