Settling debt across multiple credit cards can feel like a full-time job. If you are dealing with different payment dates, multiple balances, and different interest rates each month, you might be interested in consolidating that credit card debt with a personal loan.

Consolidating debt with a personal loan means paying off a balance in one fixed monthly payment for a set period of time. Here’s what you should know about using a debt consolidation personal loan – and the alternatives available if you don’t qualify.

When to Consider Getting a Personal Loan

If you are looking for ways to consolidate your credit card debt, here are a few examples where a personal loan could be the one for you.

If the interest rate were lower

Ultimately, the main reason it pays to consolidate all of your credit card balances with a personal loan is when you are able to get a lower interest rate. This would make your monthly payments lower than what you are currently paying for multiple cards and interest rates.

You can use our loan calculator to find out how much you can save with a personal loan.

When too many credit cards are unwieldy to manage

Carrying credit across multiple credit cards can be stressful – and payments can sometimes slip through the cracks. Another disadvantage of having multiple prepaid credit cards is figuring out which card to pay out priority and how much to allocate to each card per month. “A personal loan is a great option to make payments easier and potentially get a lower interest rate, and also to know when to pay off the debt,” says Trina Patel, financial advisory manager at Albert, an automated money management and investment app. “You are given a fixed-term loan so that you know if you have five years and what your monthly payment is.”

When you have a budget and a plan

When transferring debt to a personal loan, make sure that you do not have bad habits. “If I have $ 50,000 in credit card debt and consolidate that into a personal loan without making a plan for myself, I’ve essentially taken out $ 50,000 to spend. Make sure you replace it with something you can take care of rather than incurring additional debt, ”said Tara Alderete, director of enterprise learning for Money Management International, a nonprofit financial advisory and education agency.

You can mitigate this by creating a budget that you can use to make your monthly payments consistently. An emergency fund can also help. “If something happens, you have this money to fall back on, and you’re not robbing Peter to pay Paul,” says Alderete.

If you took the fees into account

Don’t be fooled by mystery fees. You should include in your decision whether it is worth taking out a personal loan, which often comes with commitment fees. These are one-time costs that you pay when you approve the loan. These fees are typically between 1% and 10%. When you consolidate credit card debt of $ 15,000, you could be charged with a surprising issuing fee of up to $ 1,500 if you aren’t careful while reading the contract. Some lenders avoid subscription fees, but they usually include these costs in your monthly payments, which increases your APR. Always read the fine print and do your math before entering into any new debt.

Alternatives to personal loans

Not everyone can qualify for a personal loan – and even if you do, your interest rate may not be significantly lower than your credit cards to make the transition worth it. Lenders may be skeptical of first-time borrowers, people with poor, poor or no creditworthiness, or the unemployed. If you are into any of these scenarios and can’t find what you want on a personal loan, here are a few other options for consolidating credit card debt.

Credit cards with credit transfer

Many credit cards offer an introductory 0% APR on credit transfers that can take anywhere from 12 to 15 months. This means that during this introductory period you won’t face paying interest – provided you make at least the minimum payments each month. A credit transfer credit card can be ideal for those who have a manageable debt load and want to consolidate themselves onto one credit card, which means one payment per month. Patel recommends this option for those with credit card debt of $ 5,000 or less.

Just keep a few things in mind: When transferring funds between credit cards, there is usually a charge for transferring the funds (3% to 5% of the balance). These introductory offers are usually only available to people with a good credit rating. Finally, people should make sure they settle all of their credit card balance before the introductory credit transfer offer ends, or they could be stuck on a high APR and end up in their previous predicament.

HELOC

A home equity line of credit (HELOC) can be a viable debt consolidation option if you own a home. Unlike a personal loan, a HELOC is a revolving line of credit that lets you borrow as little or as much as you want – it’s essentially like a large credit card limit, depending on your home’s equity. The interest rates on HELOCs are typically lower than a credit card, but the risk is that your home’s security. So if you default on your payments and default on your payments, you risk losing your home or condo. When choosing a HELOC, it is important to have a plan for how to pay off your debts in a timely manner. Otherwise, your lender could be knocking on your door (figuratively).