Best Debt Consolidation Loans of 2020

If you feel like you’re drowning in a sea of credit card payments, it’s important to find the right tools to organize your debt and breathe easier. Debt consolidation lets you combine multiple debts into a single monthly payment with a single interest rate — ideally, a lower interest rate than what you’ve been paying for each account individually. To know whether debt consolidation is right for you, it’s important to thoroughly understand how it works, what you should look for in a lender, and how it compares to other methods for repaying your debts.

Best debt consolidation companies

Best debt consolidation rates

BankCurrent APR RangeMax Loan AmountKey Benefit
FreedomPlus6.99%-29.99%$40,000Customized Loans
Citizens Bank7.96%-20.9%$10,000Customized Payments
Earnest5.99% and up$75,000Personalized Experience
SoFi5.99%-17.67%$100,000Unemployement Protection
Lending Club6.95%-35.89%$40,000Great for Good to Excellent Credit
Link9.9%-12%$20,000Low APRs
Marcus5.99%-28.99%$40,000No Fees
OneMain Financial18%-35.99%$20,000Great for Poor to Fair Credit
Discover Personal Loans6.99%-24.99%$35,000Low Rates, No Fees
Best Egg5.99%-29.99%$35,000Few Underwriting Costs

FreedomPlus

FreedomPlus offers competitive rates (6.99%-29.99%), quick approvals and loans up to $40,000 in 35 states. But if you’re thinking about getting a personal loan for debt consolidation from FreedomPlus, there are a few things you should take into consideration first. To qualify for the lowest rate, borrowers must have an excellent credit score, borrow less than $12,000 and have a repayment term of 24 months. If you don’t meet these criteria but have a cosigner with sufficient income, or you can show proof of sufficient retirement savings, you’ll still be eligible. FreedomPlus uses the phrase “a personal loan built for you” and claims to build a personal loan for each borrower depending on their needs. However, watch out for the fees! You could pay an origination fee between 0%-5% or a late fee of $15 or 5% of the amount that’s due.

Citizens Bank

Citizens Bank is the 13th-largest retail bank in the United States, with a broad range of financial services and over five million customers. It operates branches in Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont, so opportunities for personalized attention from this company are limited. However, for customers who live elsewhere, there’sCitizens One, the national lending division of Citizens Bank.  Loans range between $5,000 and $10,000 at 7.96%-20.9% APR and there are no fees. Citizens One allows borrowers the ability to choose their repayment term and interest rate type to customize the monthly payment amount, which is perfect for someone looking to consolidate debt.

Earnest

Earnest is a highly customizable lender that prides itself on fair evaluation, fast decisions and deposits, and personalized service. Fixed rates begin at 5.99% APR for loan amounts between $5,000 and $75,000, which is higher than most lenders, so you’ll have to ignore the temptation to take out more money than you need.  Borrowers can choose their preferred monthly payment and adjust it at any time. There are no hidden fees, and customers always have access to representatives by phone or email.

SoFi

According to SoFi, borrowers who consolidate more than $10,000 in credit card debt can expect to increase their FICO score by an average of 22 points. SoFi also allows for fixed payment schedules, low interest rates and no hidden fees.  Customers can consolidate up to $100,000 in debt at a 5.99%-17.67% APR. When you sign up for a loan with SoFi, you also gain access to a number of exclusive benefits like career coaches and financial advisors. In addition, SoFi offers unemployment protection if a borrower loses his or her job while making payments. Although the application is simple, it can take several days to receive your funds, so if you need a loan quickly, SoFi may not be the best option for you.

LendingClub

LendingClub is a peer-to-peer lending company that matches investors with borrowers. It’s a great option if you have a solid credit history and a low debt-to-income ratio. Lending terms are competitive, with the ability to borrow up to $40,000 at a 6.95%-35.89% APR. However, LendingClub does charge an origination fee of 1%-6%, and it can be very sluggish during the funding process.  It also charges fees if you pay by check, if you can’t cover your monthly payment, and if you pay late.

If you’re looking for a simple no-frills lender, Link might be a perfect fit. Link requires you to join its credit union to be eligible for loans, but there are plenty of ways to qualify. Link members have access to direct deposit, mobile banking and various company affiliates. You can borrow up to $20,000 between 9.9%-12% APR.  Link also provides a personal loan calculator to estimate your payments, finance charge and total payback. However, if you’re looking for a lender with many benefits, flexible payments and a personalized loan experience, you may want to look elsewhere.

Marcus by Goldman Sachs

Marcus offers no-fee, fixed-rate personal loans that many customers use for debt consolidation. You can borrow up to $40,000 at 5.99%-28.99% APR over 36 to 72 months, which is much more flexible than many other lenders. The screening process is almost entirely online, which offers customers better interest rates and turnaround times. If you make 12 payments on time, Marcus offers something called an “on-time payment reward” which allows you to defer one payment if necessary. Marcus won’t charge you an origination fee for processing your loan, and once approved, should only take around two business days to transfer funds. However, late payments and missed payments (unless you use the on-time payment reward) will show up on your credit report.

OneMain Financial

OneMain Financial is a great option for borrowers with poor to fair credit. The loan range is small compared to other lenders (up to $20,000 at 18%-35.99% APR) which makes this company ideal for borrowers with low credit scores, especially those that are denied by other lenders. Unsecured loans are available, but most customers must provide some kind of collateral, whether that’s a car or a home.

Discover Personal Loans

Discover is best known as a credit card issuer, but it also offers debt consolidation loans. There are no processing fees, and fixed repayment terms and fixed loan rates are available. Customers can borrow up to $35,000 at 6.99%-24.99% APR, which is an excellent range and one of the lowest rates among lenders. Discover also offers a personal loan calculator to estimate your loan amount and monthly payments, and customers have access to free education tools. But if you make a late payment, the fee is $39, which is substantially higher than many other lenders.

Best Egg

If you’re a high-income borrower looking for low rates to consolidate debt, Best Egg is definitely a good option. The process is entirely online, so there are fewer underwriting costs. You can request a loan from $2,000 to $35,000 at 5.99%-29.99% APR. The loan can be deposited into your bank account in as little as one business day if you qualify, just don’t expect a highly personalized experience.

The impact of a 0.1% debt consolidation rate change

When shopping for debt consolidation solutions, make sure you work with to find a lender who won’t change your interest rate while you’re repaying a loan. Even slight changes mean more out of your pocket that you didn’t anticipate spending.  To give you an idea of how interest works, lets say you want to consolidate $1,000 in credit card debt with a 9.5% APR and pay monthly over the course of A) three years, B) five years and C) seven years. Here’s how much a 0.1% increase in your APR would impact your costs:

Term3 yearsAPRTotalInterest Accrued
3 years$1,0009.5%$1,285$285
$1,0009.6%$1,288$288
5 years$1,0009.5%$1,475$475
$1,0009.6%$1,480$480
7 years$1,0009.5%$1,665$665
$1,0009.6%$1,672$672

This may not seem like a substantial increase, but now that you know how interest works, consider what would happen if your APR was 20%. Over the course of three years, you would pay $600 in interest.

Use our debt consolidation calculator to determine how much you can save each month by consolidating your high-interest debts into one low-interest loan.

Debt consolidation loans vs credit card balance transfers

Similar to debt consolidation, a credit card balance transfer can combine some or all of your credit card debts onto a single monthly payment, in this case by transferring 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. 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.

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

Debt consolidation loans vs personal loans

The difference between debt consolidation and taking out 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. If you need money to make a large purchase, personal loans make more sense.

Debt consolidation loans vs 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. With debt consolidation, on the other hand, you pay what you owe plus interest. 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.