5 options for consolidating credit card debt with bad credit

Getting rid of your credit card debt can be an expensive, frustrating process, especially if you're struggling with a less-than-stellar credit score. The high interest rates associated with credit cards can make it feel like you're trapped in a continuous cycle of debt, with each payment barely making a dent in your overall balance. That's especially true right now, as the average credit card rate is currently hovering near record highs — and those with bad credit may be paying rates that are much higher than the average.

But the good news is that there are options available to help you consolidate your credit card debt and regain control of your financial future. When you consolidate your credit card debt, you combine multiple debts into a single, more manageable payment. This approach offers several benefits, including potentially lower interest rates, simplified payment schedules and a clearer path to becoming debt-free. 

Having bad credit may limit some of your debt consolidation options, of course, but it doesn't mean you're out of luck entirely. If your credit score is low, here are some of the debt consolidation strategies that may be available.

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5 options for consolidating credit card debt with bad credit

If you want to consolidate your debt with less-than-ideal credit, consider the following options:

A credit card debt consolidation program

One of the better options for those with bad credit is to enroll in a credit card debt consolidation program. These programs, offered by debt relief companies, function similarly to traditional debt consolidation loans, but rather than borrowing money from a bank or credit union, the debt consolidation loan is obtained through the debt relief company's partner lender instead. 

You still typically have to meet a minimum credit score requirement to qualify. However, taking this route may benefit those with lower-than-average credit scores, as debt relief companies are used to working with people who have more challenging credit situations. Working with a debt relief company can also provide you with expert guidance and support throughout the consolidation process.

Find out more about the debt consolidation programs available to you here.

A secured personal loan

If you have bad credit, traditional unsecured personal loans might be out of reach. However, secured personal loans could be a viable option for consolidating your credit card debt. With a secured loan, you offer an asset (such as a car or savings account) as collateral. This reduces the lender's risk, making them more likely to approve your loan application despite your low credit score.

This option can provide access to lower interest rates (though you may not get a rate as low as you would through traditional means). It's crucial to understand, though, that if you default on the loan, you could lose the asset you've put up as collateral. 

A home equity loan or HELOC

If you're a homeowner, tapping into your home's equity with a home equity loan or a home equity line of credit (HELOC) can be an effective way to consolidate your credit card debt. These options typically offer lower interest rates than credit cards, even for those with less-than-perfect credit.

Both HELOCs and home equity loans can provide substantial interest savings compared to high-interest credit cards. Since these loans are secured by your home, it may be easier to get approved with a lower credit score. However, because your home is being used as collateral, you're putting your home at risk if you can't make the payments.

Balance transfer cards for bad credit

While the best balance transfer offers are usually reserved for those with good credit, some credit card companies offer balance transfer options to those with lower credit scores. These cards might have higher fees or shorter promotional periods, but they can still provide some relief from high-interest credit card debt.

While this option may not provide as much savings as other methods, it can give you a temporary reprieve from high interest rates. That, in turn, allows you to make more progress on paying down your debt.

Peer-to-peer lending

Peer-to-peer lending platforms connect you directly with individual lenders. Some of these platforms are more lenient in terms of credit requirements, making them a potential option for those with bad credit seeking to consolidate debt.

However, you should be prepared for higher interest rates compared to traditional loans if you have issues with your credit. You should also thoroughly research the platform and understand all fees before proceeding with this option, as this can be a significantly more expensive option compared to other consolidation methods.

The bottom line

Consolidating credit card debt with bad credit may seem challenging, but these options could provide a viable path forward. Credit card debt consolidation programs stand out as a particularly effective solution, providing a structured approach to debt repayment along with professional guidance. When considering these options, just be sure to carefully evaluate the terms, interest rates and potential risks associated with each. What works best for you will depend on your specific financial situation, the amount of debt you're carrying and your long-term financial goals.