Best Debt Consolidation Loans of 2020

Point of Interest

Debt consolidation loans help borrowers to pay down their debts easier and more efficiently.

Having trouble managing multiple credit card payments? A debt consolidation loan can simplify your life by trading multiple due dates and interest amounts for one payment, one due date and often, a lower interest rate. Debt consolidation loans can help borrowers better manage their debt and eventually lead to a debt-free restart on finances.


The 7 best debt consolidation loans of 2020 

Payoff – Best for credit card debt 

Best Egg – Best for high-income borrowers 

Marcus – Best overall

LendingClub – Best P2P lender

Earnest – Best for flexible repayment

SoFi – Best for member perks 

Upgrade – Best for average credit

Payoff – Best for credit card debt 

If you have more than one credit card balance to pay off, Payoff is the top choice when you need a debt consolidation loan to pay down your credit card debt. Credit card debt consolidation is all that Payoff specializes in.

Having to meet several credit card payments every month is a lot of work. You have to stay on top of each card’s due date. Forgetting to pay one or more cards on time can cost you multiple late fees. Simplify your life and save money by applying for a debt consolidation loan. 

Payoff loans generally come with a lower interest rate than a credit card.  The lender’s interest rates are as low as 5.99%, compared to the national average card interest rate of 15.49% to 22.67%. You’ll pay off your credit card debt faster if you can allocate more towards your principal payment by saving on interest.

Best Egg – Best for high-income borrowers 

If you have good credit and earn at least $100,000 a year, it’s worth adding Best Egg to your list of debt consolidation lenders to compare. Best Egg will perform a soft credit check when you apply for a loan so you know how much you qualify for — and at what interest rate — risk-free. Soft pulls to your credit file don’t affect your credit scores and give you the chance to get prequalified so you can make an informed final decision before you commit.

Best Egg provides a variety of personal loan products when you need to borrow for repairs, home improvements, and more. Credit card debt consolidation loans are one of the company’s most popular lending products. Applying for a debt consolidation loan is easy. You’ll need to apply online and provide your personal information, income, and banking history. Best Egg will evaluate your creditworthiness to issue you a loan in minutes.

Marcus – Best overall

Marcus by Goldman Sachs offers the best debt consolidation loans on the market. Marcus loans stand apart from the competition because they don’t come with any fees whatsoever. You won’t be liable for lending fees or late payment charges.

Marcus loan rates start at 6.99% APR with flexible terms of three or six years. If you find yourself struggling due to an unexpected situation, you’ll be able to defer one Marcus loan payment — as long as you made at least 12 consecutive payments before the request. Deferred payments will accrue interest, but you won’t be reported to the credit bureaus for late payments or get charged a late fee.

Getting a loan from Marcus is a fully online experience. You can apply and receive a decision through the website in just a few minutes. Once you’re approved, you can direct the funds to pay off up to 10 credit cards with no fees, as long as you choose debt consolidation as your loan purpose. Whatever is left over will deposit into your bank account.

LendingClub – Best P2P lender

LendingClub is the top peer-to-peer (P2P) lender when you’re shopping for a debt consolidation loan. The platform matches up borrowers with investors interested in making a little money by lending cash through LendingClub’s online marketplace. If you’ve had trouble getting approved for a loan, LendingClub’s wider network of investors may broaden your options.

Getting a personal loan from the P2P platform works differently than a traditional loan. LendingClub reviews an applicant’s credit history and income and grades them. Depending on your grade, you’ll qualify for a certain interest rate level based on your credit risk. Marketplace investors can choose who to lend money to, based on the borrower grade and interest rate. 

Borrowing money through the LendingClub process takes longer than other online debt consolidation lenders. Receiving an answer will take about seven business days. And once you’re approved, the electronic funds transfer into your bank account takes at least another one or two business days.

Earnest – Best for flexible repayment

Earnest provides student and debt consolidation loans that give borrowers more payment flexibility than any other loan company. Freelancers or sales employees who work on commission don’t always get paid on the same date, making it difficult to schedule payments. If your payday is unpredictable, having the flexibility to adjust your payments can protect your credit score from late payments.

You have some control over when your payments are due — and how much you have to pay. All you have to do is log in to your account to access the Earnest online dashboard or mobile app. You can make same-day payments, push back your loan due date by up to seven days or change the amount you’d like to pay. There are no limits to how often you make changes to your payment schedule — change up your repayment as much as you need — but make sure you prioritize your loan repayments so you pay off your loan as soon as possible. 

SoFi – Best for member perks 

SoFi combines personal and debt consolidation loans with a whole network of other borrowers. Qualifying for a loan with SoFi is like joining a private club with access to online forums and local social events so you can meet and chat with other borrowers. The forum topics include advice on money, personal finance and careers.

SoFi offers borrowers a relatively generous forbearance program. If you lose your job due to company downsizing or because you’ve been laid off for no fault of your own, Sofi will waive up to three months of loan payments so you can get back on your feet. The temporary waiver won’t cost you any late fees, but you’ll still accrue interest. You can always pay the interest-only portion of the loan during the forbearance period if you don’t want to fall behind on your payment schedule.

Upgrade – Best for average credit

If you have average credit, Upgrade may be your best bet. The lender approves applicants with a credit score as low as 600. A debt consolidation loan with Upgrade can help you rebuild your credit so your average credit score can improve over time. 

Credit bureaus don’t like to see consumers with maxed out credit cards. When you transfer your high credit card balances into a debt consolidation loan, your credit card’s utilization ratio score improves from the new zero balances. Plus, paying off your loan every month on time rewards you with a boost to your average credit score. The higher your credit score, the better your loan terms, such as interest rate.

If you’re interested in rebuilding your credit by taking on a debt consolidation loan, make sure you can afford the monthly payments. Once you pay off your credit cards by transferring the balances into a consolidation loan, avoid using your credit cards and running your balance up again.

LenderLoan AmountAPRTermsKey Benefit
Payoff$5,000 – $35,0005.99% – 24.99%24 – 60 monthsConsolidate all your card debt
Best Egg
$2,000 – $35,0005.99% – 29.99%36 – 60 monthsBorrow high amounts fast
$3,500 – $40,0006.99% – 28.99%36 – 72 monthsNo fees and low interest
Lending Club
$5,000 – $35,00010.68% – 35.89%36 – 60 monthsA wider variety of lenders available
$5,000 – $75,0005.99% – 17.24%36 – 60 monthsSchedule payments convenient to you
$5,000 – $100,0005.99% – 18.64%36 – 84 monthsBorrow and network with others
Upgrade$1,000 – $35,0007.99% – 35.79%36 – 60 monthsAverage credit scores qualify

What is debt consolidation?

Debt consolidation is when you take out a loan to pay off two or more debts. Most people use a debt consolidation loan to pay down their credit cards. The loan funds pay off the credit cards, leaving you with one single loan payment for the debt consolidation loan. The loan is usually far cheaper than the credit card interest rates you’re paying on your month-to-month balances.

When should I get a loan to consolidate debt? 

You should get a loan to consolidate debt when you can’t manage your credit card payments. If you’ve run a high balance on more than one credit card and you’re feeling overwhelmed, consolidating all of your credit card debt can help you pay it down sooner and for less of a hassle.

Other alternatives to consolidate debt

Besides consolidating debt, consider paying off your credit cards by focusing on paying down your most expensive credit card faster. Schedule minimum payments on all other cards and put as much as you can afford towards your most expensive credit card debt. Once it’s paid off, divert the funds to the second most expensive card and keep going down the list until you’re debt-free.

Another alternative is a balance transfer credit card. If you find a card with an attractive signup bonus such as 0% interest over a period of time, transferring your most expensive credit card balance will help you pay off the balance faster with no interest.

Debt consolidation versus credit card balance transfer

Similar to debt consolidation, a credit card balance transfer can combine some or all of your credit card debts onto a single monthly payment — you’ll transfer the balances to a single card. 

You could save money on interest with this option if you transfer balances from a high-interest credit card to a card with a lower interest rate. Often, balance transfer cards have an introductory rate of 0% for 12 to 21 months. It’s important to use that period to pay off the balance without charging any additional purchases. Of course, you’ll need a transfer card with a balance large enough to accommodate all of your debts. Watch out for limits and fees, and don’t be surprised if your card charges a 3% transfer fee. 

On the other hand, debt consolidation loans often offer much lower interest rates than a credit card. Once you’re funded, your interest rate is locked in. You won’t see any interest rate fluctuations like you may find with a credit card that comes with an adjustable interest rate.

Use our credit card balance transfer calculator to see if you should transfer your balance to a lower interest credit card.

Debt consolidation versus personal loans 

The difference between a debt consolidation and a personal loan is that with debt consolidation, you’re not borrowing money to spend. You’re combining all of your debts into one monthly payment. If you’re only interested in combining debts because you’re overwhelmed with multiple credit card payments, then debt consolidation is the answer. 

Personal loans help you fund purchases such as a emergency car repairs, home improvement or purchasing a car. If you need money to make a large purchase, personal loans make more sense.

Debt consolidation versus debt settlement

These terms are often used interchangeably, but they mean completely different things for someone who is struggling financially. Some people become so overwhelmed by their credit card bills that even debt consolidation won’t make the payments affordable. 

In that case, debt settlement allows you to negotiate with creditors to settle a debt for less than you owe. Once you settle, your credit score may be impacted. The card provider will report that your account was settled instead of paid in full. 

In terms of what solution is better, it really depends on the amount you owe, your credit, your budget, and the impact each may have on your credit score. Settling is less damaging to your credit score than repeated late fees or a collections for nonpayment. 

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