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Pay Down My Debt

What Is Debt Consolidation?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any credit card issuer. This site may be compensated through a credit card issuer partnership.

Debt consolidation rolls several debts into one easy-to-manage payment. It’s a strategy you can use to simplify the debt payoff process and save some money on interest. If you’re overwhelmed with multiple high interest debts, it may be just what you need to become debt-free faster.

How does debt consolidation work?

If you have many unsecured debts to pay off, you can turn them into a single monthly payment through debt consolidation. When you consolidate your debt, you won’t have to manage different payments, interest rates, payment dates and payback periods. You’ll eliminate confusion and make the process of repaying debt more manageable.

While there are several debt consolidation strategies at your disposal, a debt consolidation loan is a popular option. A debt consolidation loan is a personal loan you use to combine multiple debts with a new one, ideally with a lower interest rate and more favorable terms. You’ll receive a lump sum of cash to pay off your debts, and then make a single monthly payment on your new loan. (Some lenders can pay off your creditors directly, however.)

You can use debt consolidation to pay off consumer debt such as:

  • Credit cards
  • Medical bills
  • Utility bills
  • Payday loans
  • Taxes
  • Collection bills

Once you figure out all the unsecured debt you owe, use our debt consolidation loan calculator to get an idea of how long it will take you to repay them. The calculator compares the cost of all your debts versus the cost for a debt consolidation loan. It can help you determine how much money you can potentially save.

Pros and cons of debt consolidation

Pros:

Cons:

  • One monthly debt bill: Since you’ll only have to make one monthly debt payment rather than several, you’ll find the debt payoff process to be much easier.
  • May save money on interest: If you have high interest rates on your existing debts, consolidating them to a lower interest rate can allow you to save money over time.
  • Lower monthly payments: With debt consolidation, you can reduce your monthly payments through a lower interest rate and, if you choose, a longer repayment term.
  • Can pay off debt faster: A lower interest rate and a single debt bill can allow you to become debt-free faster than if you were to keep your multiple debt payments.

  • Potential fees: Some lenders charge an origination fee to take out a loan. Others may charge you a prepayment penalty if you pay off your debt early.
  • Can be hard to qualify: Traditional debt consolidation loans are unsecured personal loans, which require great credit to receive the best interest rates.
  • Does not solve an overspending problem: While debt consolidation can be a helpful strategy, it won’t help you control your spending and stay out of debt.

Where to find debt consolidation loans

Banks, credit unions and online lenders all offer debt consolidation loans. Here are a few options you can choose from.

Debt consolidation loan lenders
 

FreedomPlus

Learn more

Peerform

Learn more

SoFi

Learn more

APR

5.99%-29.99%

5.99%-25.05%

5.99%-18.82%

Terms

24 to 60 months

36 or 60 months

24 to 84 months

Borrowing limits

$7,500 to $40,000

$4,000 to $25,000

$5,000 to $100,000

Origination fee

0.00% - 4.99%

1.00% - 5.00%

No origination fee

Minimum credit score requirement

Varies

600

680

How to shop debt consolidation lenders

You can compare debt consolidation loans in our personal loan marketplace. You’ll want to review such information as:

  • Interest rates
  • Borrowing limits
  • Repayment terms
  • Fee structures
  • Minimum credit score requirements

Online lenders tend to offer the most competitive loan terms, as they have lower overhead costs compared with banks. However, if you prefer having face-to-face time with your lender, you could seek information from local banks. Credit unions can be a great option as well, as they are member-run and may have fewer fees.

Is debt consolidation worth it?

Consider the following questions as you weigh whether debt consolidation is right for you:

  • Are you overwhelmed by multiple debts?
  • Would you like to potentially save money on interest charges?
  • Do you wish you had lower monthly payments?
  • Do you have a plan in place for staying out of debt in the future?
  • Do you have a good to excellent credit score?

If you’re an individual with good credit who is looking for an easier way to manage your debt, you may benefit from consolidation. However, if you’re dealing with a spending problem and don’t have the best credit, this strategy may not be a good fit.

3 debt consolidation alternatives

Balance transfer credit card

A common alternative to a debt consolidation loan is a balance transfer. With this repayment strategy, you’ll take out a balance transfer card and move your existing credit card debt onto it. The benefit of a balance transfer card is that they commonly come with a promotional 0% APR. You can avoid interest charges by repaying your debt in full during the promotional period.

However, if you don’t repay your debt in full, you’ll be responsible for all of the interest that accrued. There’s also a balance transfer fee you’ll typically pay; it’ll be a percentage of the balance you transfer. That said, this strategy is best for consumers who can aggressively repay what they owe and are sure the balance transfer fees they’ll pay will be offset by the amount they save on interest.

Pros

Cons

  • Move your debt to a better credit card: Depending on the card you get approved for, you may be able to move your debt to a card with a lower interest rate and more favorable terms.
  • Interest savings: You can consolidate your credit card debt into a single credit card with a 0% or low promotional APR that can save you money on interest.
  • Can help your credit: If you use your credit transfer card to reduce your credit utilization ratio, pay down debt faster and lower your balance to zero, you can improve your credit.

  • Balance transfer fee: While balance transfer fees vary, most credit cards charge 3% of the balance.
  • Promotional APRs expire quickly: These APRs last about 12 to 21 months. After this period, the card will function like a typical credit card and the interest rate will go back up.
  • Can add to debt: If you have a spending problem, a balance transfer card can make it worse and put you in more debt by freeing up your old credit lines.

Debt settlement

Debt settlement involves negotiating with your creditors to settle for less than what you owe. You can hire a debt settlement company to negotiate with creditors on your behalf, though that may be a risky move. That’s because some debt settlement companies will ask you to stop making payments in order to starve creditors into negotiating over a payoff amount; you’re also liable to pay fees.

Pros

Cons

  • Potential to reduce your debt: Debt settlement can lower the amount of debt you owe to various creditors.
  • One deposit every month: If you hire a debt settlement company, you’ll deposit money into a special account every month. As your balance goes up, they’ll contact your creditors to negotiate lower settlement amounts.
  • Can pay off debt faster: With debt settlement, you may be able to settle your debt in only 24 to 48 months.

  • No guarantees: Your creditors are under no obligation to negotiate over your debt.
  • Your credit will take a hit: When you settle a debt, your credit report will show that a debt was paid off for less than the full amount.
  • High fee: If you opt for a debt settlement company, you may owe them a fee of 15% of your total debt once it settles.
  • Tax consequences: You may have to pay taxes on the portion of your debt that is forgiven by creditors.

Bankruptcy

Bankruptcy is a legal process where your assets are used to pay off debts (Chapter 7) or you repay debt via a debt repayment plan (Chapter 13). Since bankruptcy comes with long-term legal and financial consequences, it’s wise to consult a bankruptcy lawyer before pursuing it.

Pros

Cons

  • Relief from collection activity: Once you file for bankruptcy, most debt collectors will stop contacting you.
  • Chance to discharge your debts: If you are overwhelmed with debt, bankruptcy can allow you to wipe them out.
  • A short process: Chapter 7 bankruptcy only takes 4 months, on average.

  • May lose some of your assets: If you opt for Chapter 7, you may lose your home and other assets.
  • Negative long-term impact to your credit: While Chapter 7 bankruptcy stays on your credit report for 10 years, Chapter 13 remains for seven years.
  • Strict qualifications: You’ll have to meet certain income criteria if you wish to pursue Chapter 7. If you don’t qualify, Chapter 13 may be your only option.

Debt consolidation can be a great way for you to take control of your debt and improve your finances. However, it is not right for everyone so it’s important to do your research before you take the plunge.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Personal Loans

Citibank Personal Loan Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Citi
APR

7.99%
To
23.99%

Credit Req.

Not specified

Terms

12 to 60

months

Origination Fee

Not specified

APPLY NOW Secured

on Citi’s secure website

Citibank personal loan details
 

Fees and penalties

  • Term lengths: 12 to 60 months
  • APR range: 7.99%-23.99%
  • Loan amounts: $2,000-$50,000
  • Time to funding: Checks are mailed within five business days of approval.
  • Credit check: Hard Pull
  • Origination fee: Not specified.
  • Prepayment fee: Not specified.
  • Late payment fee: Not specified.

Perks offered to Citibank personal loan customers aren’t widely advertised online. However, linking a personal loan account to an eligible checking account enrolled in Citi ThankYou Rewards can help you earn points on a monthly basis. Points never expire and can be redeemed for gift cards, travel rewards, cash and more.

Eligibility requirements

  • Minimum credit score: Not specified.
  • Minimum credit history: Not specified.
  • Maximum debt-to-income ratio: Not specified.

While a minimum credit score isn’t listed, Citibank does specify that the lowest quoted personal loan rate requires the borrower to have excellent credit and to use Citibank Auto Deduct.

Citibank personal loans are only available to borrowers with a maximum of one existing personal loan account with the financial institution. If clients wish to apply for a second Citibank personal loan, the most recent personal loan cannot have been opened within the past six months. Qualified applicants are also required to have a minimum annual income of $10,500.

It’s also worth noting that anyone who wants to apply for a personal loan online must either be a current Citi checking or savings account customer registered for Citibank online or have received a Citi Personal Loan offer with an invitation number. Without an invitation, current customers who don’t have an online account and non-customers must apply in person at a Citibank branch or over the phone.

Applying for a personal loan from Citibank

Personal loans are available in amounts from $2,000 to $50,000, but applications cannot be submitted online for amounts exceeding $30,000. Applicants who wish to borrow up to $50,000 must call 1-877-362-9100 or visit a Citibank branch location.

To begin the online application process, current Citibank customers registered for online access will need to enter their user ID and password. Non-Citibank customers who have received a Citi Personal Loan offer with an invitation number will be directed to an application site and asked to enter the invitation code, their last name and zip code.

Credit scores are not impacted for viewing a personal loan offer. Upon approval, a check for the full amount of the loan will be mailed within five business days.

Pros and cons of a Citibank personal loan

Pros:

Cons:

  • Fixed rate: Citibank personal loans come with a fixed rate, allowing borrowers to enjoy fixed monthly payments. Note that defaulting on your loan may come with a 2% APR increase.
  • ThankYou Rewards: Borrowers can earn monthly ThankYou Rewards and redeem them for cash, gift cards, travel, and more.
  • Competitive rates: Fixed rates range from 7.99% to 23.99% APR.
  • Flexible terms: Borrowers can choose from a variety of repayment terms, from 12 to 60 months.
  • Limited online application access: To apply online, prospective borrowers must either be a current Citi checking or savings account customer registered for Citibank online or have received a Citi Personal Loan offer with an invitation number. Without an invitation, current customers who don’t have an online account and non-customers must apply in person or by phone.
  • Lowest rate may be hard to get: To receive the lowest quoted rate, borrowers must use Citibank Auto Deduct to repay the loan, have excellent credit, borrow at least $10,000, have a loan term of 36 months or less and sufficient relationship balances.

Who’s the best fit for a Citibank personal loan?

A Citibank personal loan can be a great option for consumers with a one-time need to borrow money. Those looking to get the lowest rate at Citibank will need to fulfill the following qualifications:

  • Repay with Citibank Auto Deduct
  • Have excellent credit
  • Borrow at least $10,000
  • Repay the loan within 36 months
  • Have sufficient relationship balances

That could be a lot of hoops to jump through. However, loan amounts range up to $50,000, so this product can be a good fit for consumers who need a higher loan amount. The chance to earn ThankYou Rewards, which can be redeemed for cash, gift cards, travel, and more can make this lender a good choice for many borrowers.

Citibank consumer reviews

Citibank has an F rating from the Better Business Bureau (BBB), as of July 2019. LendingTree, MagnifyMoney’s parent company, does not have consumer reviews on personal loans from Citibank.

We advise potential borrowers to carefully research lenders before applying. Read each lender’s fine print to get a good understanding of its fee structure, review rates and terms and consider customer reviews.

Citibank FAQ

No. You do not need to put any money down in order to take out a Citibank personal loan.

You can take out a Citibank personal loan to make improvements to your home, pay down high-interest debt, or fund a large, one-time purchase.

Citibank Auto Deduct automatically deducts the required payment from your checking, savings, or money market account. You can land a lower rate by signing up for Citibank Auto Deduct.

If you do not pay back your Citibank personal loan, your APR may increase by 2%.

To earn monthly Citi ThankYou Points, you need to complete one qualifying bill payment and one qualifying direct deposit each statement period.

A Citigold membership gets you your own Relationship Manager, a wide range of investment products in all major currencies, global banking and investment services, access to offshore wealth management, and more. By joining, you can get a 0.25% rate discount on your personal loan.

If you join Citi Priority, you can receive a 0.25% rate discount on your personal loan as well as waived fees for various financial products, 24/7 customer service, and preferred pricing on a selection of mortgages.

Alternative personal loan options

LightStream

APR

4.99%
To
16.79%*

with AutoPay

Credit Req.

Not specified

Terms

24 to 144*

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

LightStream is the online lending division of SunTrust Bank.... Read More


*Your APR may differ based on loan purpose, amount, term, and your credit profile. Rate is quoted with AutoPay discount, which is only available when you select AutoPay prior to loan funding. Rates without AutoPay may be higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 4.99% APR with a term of 3 years would result in 36 monthly payments of $299.66.

LightStream, a division of SunTrust Bank, offers personal loans from $5,000 to $100,000. Rates are fixed and vary by loan purpose. There are no fees attached to the loan, including prepayment penalties, making it a good choice for consumers who might want to pay the loan off early. Loans can be funded as quickly as one day of approval, so this is a good option for anyone who needs cash fast.

PenFed Credit Union

PenFed Credit Union
APR

Starting at 6.49%

Credit Req.

Not specified

Terms

36 to 60

months

Origination Fee

None

APPLY NOW Secured

on PenFed Credit Union’s secure website

Pentagon Federal Credit Union (PenFed) offers personal loans with terms up to five years and maximum loan amounts of $25,000.... Read More

PenFed grants personal loans from $500 to $25,000. Along with none, there are also no other hidden costs, making it a great choice for borrowers looking to avoid additional expenses. Funds are available immediately, which is advantageous for consumers who need cash now. Do note, personal loans are only available to PenFed members.

SoFi

SoFi
APR

5.99%
To
18.64%*

Credit Req.

680

Minimum Credit Score

Terms

24 to 84

months

Origination Fee

No origination fee

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

SoFi offers some of the best rates and terms on the market. ... Read More


Fixed rates from 5.99% APR to 18.64% APR (with AutoPay). SoFi rate ranges are current as of March 27, 2020 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your creditworthiness, years of professional experience, income and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

SoFi provides personal loans ranging in value from $5,000 to $100,000, making it a good choice for borrowers who need a significant amount of money. Rates are fixed and loans are completely free of fees. Funds are typically deposited in consumer accounts a few days after approval and the successful completion of required paperwork. An added bonus, SoFi’s unemployment protection benefit offers an additional layer of security by allowing borrowers to temporarily pause payments and helping them find a new job if they become unemployed….

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Personal Loans

Payoff Personal Loan Review

APR

5.99%
To
24.99%

Credit Req.

640

Minimum Credit Score

Terms

24 and 60

months

Origination Fee

up to 5.00%

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

Payoff is a financial services firm that offers personal loans mainly to help consolidate credit card debt.... Read More


All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

Payoff personal loan details
 

Fees and penalties

  • Terms: 24 and 60 months
  • APR range: 5.99%-24.99%
  • Loan amounts: $5,000-$35,000
  • Time to funding: Most loans are funded within 2-5 business days after the verification process is completed.
  • Hard pull/soft pull: Soft Pull
  • Origination fee: up to 5.00%
  • Prepayment fee: None
  • Late payment fee: None

Payoff aims for fee transparency: The only fee associated with a Payoff loan is the origination fee. Payoff members receive other benefits, including:

  • Free FICO score updates each month
  • Job loss support
  • Quarterly check-in calls from Payoff’s member experience team during your first year
  • Tools that assess your personality, stress and cash flow to help you better understand yourself and your financial habits

Eligibility requirements

  • Minimum credit score: 640
  • Minimum credit history: 3 years of good credit
  • Maximum debt-to-income ratio: 50%

Payoff requires that you have at least two open and satisfactory tradelines on your credit report (i.e. open lines of credit on which you’ve made on-time payments). Any delinquencies (past due payments) must be resolved before applying for a Payoff loan. You must also have not opened a personal installment loan within the past 12 months.

Payoff loans are not yet available in Massachusetts, Mississippi, Nebraska, Nevada, and West Virginia. Additionally, candidates must apply as individuals — there are no joint applications for spouses.

Payoff loans are intended to help eliminate credit card debt. Contact Payoff to discuss your personal debt situation.

Applying for a personal loan from Payoff

To begin the Payoff loan application process, you can visit the website and enter some initial personal financial information to get a feel for the types of rates you may be eligible for. You can also review the terms of different loan packages and select one that best meets your needs.

If you’ve decided to move forward with a Payoff loan, you will be asked to complete the online application process and upload multiple documents. The documents required will differ based on the individual. They generally include:

  • Proof of identification, such as a current driver’s license or passport
  • Proof of income, usually your two most recent pay stubs. (If you are self-employed or can’t provide pay stubs, you may be asked to provide tax documents like Form 1040, Schedule C and/or K-1.)
  • Other financial documentation, including your most recent monthly bank statement and mortgage statement

Payoff recommends assembling all of your documents in advance of your online application, because a partial submission will slow the process. Once you’ve uploaded your documents and attached them to your application online, you may log in anytime to check the status. If Payoff needs further documentation or clarification, someone from the company will contact you. Though the application process is done completely online, there is a toll-free number you can call with questions along the way.

It typically takes three to seven business days after your completed application has been received for it to be reviewed. A Member Advocate will reach out either way to let you know if your application is accepted or declined. If you are declined, you can apply elsewhere or try again after 30 days. If you are accepted, your loan will fund within two to five business days. Payoff does a hard credit check just before your loan is finalized.

Pros and cons of a Payoff personal loan

Pros:

Cons:

  • Suite of products for customers: Payoff provides customers with a variety of support services addressing not only the financial but emotional and psychological aspects of debt.
  • Clear fee structure: With just an upfront origination fee and no other fees, Payoff customers don’t have to worry about penalties or unexpected charges popping up.
  • OK rates: Payoff’s APR is on par with competitive loan offerings — you won’t get significantly lower rates here.
  • Strict qualification requirement: If you don’t have good credit or 3+ years of credit history, a Payoff loan may not be an option.

Who’s the best fit for a Payoff personal loan

Payoff is a great option for people with a good credit history who are paying a lot of interest on credit card debt. Consolidating credit card debt with a personal loan can often result in lower overall interest payments. Payoff can also be helpful for individuals who have multiple credit card payments each month, as consolidating these debts will result in a single, easy-to-track monthly payment.

Payoff’s quarterly check-in calls during the first year may be especially helpful for individuals who need help staying on track as they start paying off debt.

Payoff consumer reviews

Payoff has an A+ rating with the Better Business Bureau (BBB). LendingTree, which owns MagnifyMoney, has reviews from consumers who used Payoff. They had great things to say about the lender, with many commenting on the excellent customer service and friendly, knowledgeable staff.

“From start to finish so easy to deal with!” wrote Dale from Hazlet, N.J. “Love that they follow up with you by telephone. I didn’t have to keep calling they called me first to introduce themselves and explain process!! Should have done this years ago! Will be referring friends! Thank you!”

TaMicah from Frisco, Texas said, “The whole process was easy, uploading online, customer advocates were prompt and easy to talk to, and the funds were transferred within a couple business days!”

Payoff FAQ

Payoff is not a bank. The lender works with lending partners to originate loans.

The Payoff loan is designed to eliminate or lower your credit card balances. It can give you the chance to pay off your debt faster and take control of your finances.

Yes! In fact, Payoff encourages it. By making additional payments you can end your debt quickly while reducing the amount you pay in interest.

Every month, your payments will be drawn from your checking account. You can change your payment due date every 12 months.

Payoff understands that life happens. If you have difficulty making a payment, contact them so that your individual situation can be discussed.

Payoff uses state-of-the-art security technology, certified by McAfee. All sensitive financial data, such as Social Security numbers and bank account numbers is stored in a highly secure environment via 256-bit encryption.

Alternative personal loan options

Lending Club

APR

6.95%
To
35.89%

Credit Req.

Not specified

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates.... Read More

LendingClub is an online peer-to-peer lending marketplace for personal loans, auto refinancing, and business loans. Though Lendingclub’s offerings are generally competitive, its funding time is longer than most lenders in the space (can take a week) and its origination fee is a bit higher.

Earnest

Earnest is an alternative lender that offers personal loans, student loan refinancing and home loans. The company boasts that it gives customers lower rates by using nontraditional financial data such as savings patterns, investments and career trajectory when considering applications. Earnest loans have no fees and are ideal for young professionals with a degree and steady employment who have not yet built a robust credit history.

Upstart

APR

6.18%
To
35.99%

Credit Req.

620

Minimum Credit Score

Terms

36 & 60

months

Origination Fee

Up to 8.00%

SEE OFFERS Secured

on LendingTree’s secure website

Upstart is an online lender created by ex-Googlers.... Read More

In addition to traditional qualifiers like a FICO Score, Upstart also considers your education, area of study and job history when reviewing your loan application. The company says once you are approved, your loan can be funded the next day. Upstart loans are subject to a number of fees, including an origination fee, late fees and check processing fees. The lender is a good fit for young adults with a good credit score and a short credit history who want to pay off debt.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Get Personal Loan Offers
Up to $50,000

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