Is credit card debt consolidation worth it right now?

Credit card debt recently hit record highs across the U.S., with the total amount nationwide now topping over $1.2 trillion, according to the latest data from the Federal Reserve Bank of New York. At the same time, the average credit card interest rate is hovering below 22% — just below a record high. For those who are juggling rising costs of living, these types of mounting credit card balances and today’s sky-high interest rates are pushing their budgets to the brink. 

Meanwhile, the broader economic landscape isn’t offering much relief. Although inflation has cooled slightly in recent months, today’s inflation rate remains above the Federal Reserve’s 2% target, meaning prices are still high for everything from groceries to rent. The Fed has also paused cuts to its benchmark interest rate so far in 2025, which is contributing to the costly borrowing environment. So, if you’re carrying credit card debt in this climate, finding a way to get rid of that debt may be more important than ever.

That’s where debt consolidation comes in. Rolling your debts into one lower-rate loan can be an effective way to get ahead. But it’s not a silver bullet — and it doesn’t make sense for everyone or in every situation. So is credit card debt consolidation a good idea right now?

Find out what debt relief strategies are available to you now.

Is credit card debt consolidation worth it right now?

For most people who are dealing with high-rate credit card debt right now, consolidation makes a lot of sense. After all, with credit card interest rates hovering near 22% on average and retail credit card rates averaging nearly 30%, financing purchases with a credit card is an expensive approach to take right now. Credit card interest also compounds, meaning that you’re charged interest over time on the previous interest charges that have accrued, so it’s easy for your balance to balloon out of control quickly. 

As a result, consolidating your debt with even a slight reduction in your interest rate can translate to significant savings over time. And there are a lot of options that could lower your rate more than just slightly. For example, the average personal loan rate is about 12% currently, so rolling your high-rate credit card debt into a personal loan for debt consolidation could result in paying a lot less for interest over time. Plus, consolidating your debt into a single monthly payment can make your financial life a lot easier to manage.

However, the effectiveness of debt consolidation largely depends on your credit profile. If you have good to excellent credit (generally a FICO score of 670 or higher), you may qualify for the lowest consolidation loan rates — which are a massive improvement compared to credit card rates. Likewise, some balance transfer cards are still offering 0% intro APR periods for up to 21 months, which can be a golden opportunity to knock out debt interest-free if you can pay it off within that window.

That said, if your credit is poor or your debt-to-income (DTI) ratio is high, you might not qualify for favorable loan terms, or you may be offered a consolidation loan with a rate that’s barely lower than your current credit cards. And while there are consolidation options available for those with less-than-perfect credit — like debt consolidation programs through debt relief companies — you’ll want to understand the fine print before committing.

Find out how to get rid of your high-rate credit card debt now.

How to determine whether debt consolidation is the right move

Before pursuing debt consolidation, it may help to conduct a thorough assessment of your financial situation, which can help you determine whether debt consolidation is the right move. Here’s how to do that:

• Understand the scope of your debt: List all your debts, including balances, interest rates and monthly payments. This will help you understand your total debt load and identify which debts could benefit most from consolidation.
• Check your credit score: Your credit score significantly impacts the interest rate you’ll receive on a consolidation loan. A higher score increases your chances of securing a loan with favorable terms.
• Compare loan offers: Shop around for consolidation loans, comparing interest rates, fees and repayment terms. Ensure that the new loan’s interest rate is lower than the weighted average of your current debts.
• Calculate potential savings: Use online calculators to estimate how much you’d save in interest and how long it would take to pay off your debt with a consolidation loan.
• Evaluate your financial habits: Debt consolidation can simplify payments, but it’s crucial to address any underlying spending issues. Without changes in behavior, you risk accumulating new debt on top of the consolidation loan.

The bottom line

Credit card debt consolidation presents a valuable opportunity for many borrowers in today’s economic landscape, especially considering that the spread between credit card rates and consolidation options remains substantial. For cardholders with good credit, manageable debt-to-income (DTI) ratios and commitment to avoiding future high-rate debt, consolidation can provide meaningful financial relief and accelerate the journey to debt freedom.

However, debt consolidation isn’t a universal solution. Those with poor credit, unstable income or deeply entrenched spending habits may find better results working with credit counseling services or debt relief companies that provide financial guidance and more options, like credit card debt forgiveness, for getting rid of this type of debt.