Can I Consolidate My Credit Card Debt?

Study your finances before consolidating credit card debt.
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If you find your debt load and monthly payments overwhelming, you may want to consider consolidating your credit card debt. The Federal Trade Commission's article, "Knee Deep in Debt," recommends consolidating debt as one of many possible strategies, including budgeting, debt negotiation or credit card counseling. Before you take the plunge, examine your current financial situation to see if another strategy better serves your needs and goals.

Interest Rates

Before making the move toward consolidating debt, you should thoroughly study your current financial situation. Financial author Suze Orman offers a guide for people managing their debt that recommends negotiating the best credit card interest rate, even if you have to switch cards regularly. Study all interest rates and fees associated with your current debt so that you can target the credit cards with the highest rates first. If you cannot pay more than your minimum payments on your various lines of credit, you are a candidate for credit card debt consolidation.


Some people considering debt consolidation use their homes as collateral. They may refinance their homes and have the credit card debt rolled into their mortgage payments. However, you should examine the total amount you will need to pay every month to make sure you do not get into deeper financial trouble. If you default on your new mortgage payment, you run the risk of losing your home. On the positive side, the Lending Tree website indicates the interest you pay on your new mortgage will probably be tax-deductible, while most credit card interest is not.

Spending Habits

Consider your financial behavior and spending patterns to determine if consolidating your credit card debt is worth it. As Jenny McCune reports in her article, "Dangers of Debt Consolidation," 70 percent of Americans who consolidate debt wind up with similar levels of debt within two years because they do not change their spending habits. She recommends meeting with a reputable, accredited credit counselor to consider your options before taking on a new creditor.

Hidden Fees

Before taking on a debt consolidation loan or a home equity line of credit, review your paperwork. When you take into account fees and interest, some consolidation services wind up with a higher monthly payment than what you had paid before. Watch out for scams and hidden fees by checking the company's reviews, asking for references and getting all information in writing.

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