Are you looking for banks that do debt consolidation loans? Consolidation loans help you manage your debt more effectively. When sourcing for banks that help with debt consolidation, look out for the ones that meet your needs, the ones that have flexible repayment terms, and the ones with the lowest interest rate and little or no fees.
What Is Debt Consolidation?
Debt consolidation is one of the best ways to get off your bills and payments when in a bad financial situation. Debt consolidation does not entirely pay off your debts. It combines all your debts in one payment and lowers the interest rates you are to pay on each loan to help you pay them faster. Paying off loans or debts faster raises your credit score – this is what debt consolidation does.
Top 10 Banks That Do Debt Consolidation Loans in 2023
Here are the best banks that do debt consolidation. Please go through them and choose the one that fits you the most.
1. U.S. Bank
U.S Bank is one of the best banks that do debt consolidation loans in the United States. It is a well-established and trusted bank that does debt consolidation. U.S. bank does not charge an origination fee, have low loan APRs, and have repayment duration of up to 7 years.
Also, the U.S. bank gives rate discounts to eligible customers, 0.50% for setting up autopay and 1% for those with an excellent credit score of 800 or higher.
However, it charges a levy a $29 fee for late payments. If you are a customer at a U.S. bank, your credit score requirement is relatively low. For non-customer, you must have a high credit score to access the lender. U.S. bank is limited and available in only 26 states. Also, the restriction is placed on personal loans between $35,000 and $45,000. The minimum credit score for customers is 660; it is higher for non-customers.
- Repayment duration: 7 years
2. OneMain Financial
Another top bank that does debt consolidation is OneMain Financial. OneMain Financial is an Indiana-based bank that offers smaller loans at higher rates than typical debt consolidation personal loans. The con of this bank is that it does not have hidden fees and is suitable for those with poor credit scores.
When applying, the bank will investigate your income, credit history, and debt load to determine whether you qualify for the loan. You can borrow from $1,500 to $20,000,
- Fixed APR:18.00% –35.99%
- Repayment duration: 2 to 5 years
3. Best Eggs
Best Egg is a top-notch digital bank that offers unsecured personal loans that can be used for various purposes, including debt consolidation. It is best for high-income earners with a high credit score of a minimum of 600.
Best Egg offers personal loans for debt consolidation from $2,000 to $50,000.
- Fixed APR: 8.99% –35.99%
- Repayment duration: 3 to 5 years
4. Happy Money
Happy Money is one of the best digital banks that do debt consolidation, specifically designed for borrowers who want to settle their credit card debt.
Happy Monday helps you to consolidate credit card debt without incurring unnecessary fees. It would be best to have a minimum credit score of 640, and the application process is entirely online.
With Happy Money, borrowers can get free monthly FICO updates and receive $5,000– $40,000.
- Fixed APR: 10.50% –29.99%
- Repayment duration: 2 to 5 years
Another reliable digital bank for debt consolidation is LightStream. LightStream offers personal loans for up to $100,000 and a repayment duration of 84 months. This makes it the best personal loan for large loans and longer repayment duration.
The rates are fixed, and you must have excellent credit scores and supplementary assets to qualify for a large personal loan.
- Fixed APR: 7.99% –23.99%
- Term lengths: 2 to 7 years
Pentagon Federal Credit Union offers the best small-dollar personal loan with a credit union. Personal loans are unsecured, fixed-rate, and can be used for debt consolidation.
To access a personal loan for debt consolidation from Pentagon, you must first become a credit union member by opening a savings account with an initial deposit of $5.
You can get personalized loans for as little as $600 and a maximum limit of $50,000. To apply, you must have a minimum credit score of 700.
- Fixed APR From: 7.74% –17.99%
- Repayment duration: 1 to 5 years
Are you looking for a reliable bank that does debt consolidation? Discover is a reputable digital bank that offers unsecured personal loans for debt consolidation. It is best for those with high credit scores, and you can pay creditors directly.
The APR starts at 6.99 percent, which is lower than most lenders. You get funded the next business day if your application is submitted and approved.
You can borrow up to $2,500– $35,000and must be earning an annual minimum of $25,000
- Fixed APR: 6.99% –24.99%
- Repayment duration: 3 to 7 years
If you have a little credit history and are looking for a personal loan for debt consolidation, Upstart is the best platform. Upstart offers unsecured personal loans with unique underwriting criteria for borrowers with thin credit scores. Upstart considers other factors, such as schooling and employment history, when approving your loan. The loan amounts that can be borrowed range from $1,000– $50,000
- Fixed APR: 6.50% –35.99%
- Repayment duration: 3 to 5 years
9. Universal Credit
Universal Credit offers one of the best loans for bad credit that ranges from $1,000 and $50,000. The minimum credit score is 560. The loan terms are from 36 to 60 months.
Although suitable for borrowers with bad credit, Universal Credit comes with some tradeoffs. It charges high APRs and a high origination fee of 4.25% to 8%.
- APR: 11.69% 35.93%
- Repayment duration: 36 to 60 months
Achieve (formerly FreedomPlus) is a reliable indirect lending platform offering personal debt consolidation loans. It offers flexible loan terms, which are between two to five years. You can borrow between 7,500 to $40,000. This makes it a good choice when consolidating a large debt by spreading repayment over an extended period.
It charges an origination fee of 1.99% to 4.99% of the total loan amount. The minimum credit score required is 620.
- APR range: 7.99% to 29.99%
Is Debt Consolidation A Good Idea?
Yes, debt consolidation is a good idea because it can positively influence your credit score in some ways. Applying for a personal loan to consolidate debt can cause a short drop in your credit score, but paying off credit cards can help your score grow.
Also, debt consolidation lowers the amount you need to pay, which helps you to make an on-time debt payment that builds your credit score over time.
However, the disadvantage of debt consolidation is that it can’t serve as a long-term financial solution, and it may attract up-front costs. Missing payments may set your credit down. So if you must go for debt consolidation, you must be consistent.
Does Chase Offer Debt Consolidation Loans?
Yes, Chase offers debt consolidation loans. How does it do it? Chase helps to consolidate debt by consolidating multiple credit card debts into a single loan payment, which helps you manage and build a structure around.
Also, it offers unsecured personal loans that can be used for various purposes, including debt consolidation. Chase charges interest rates depending o your credit score.
Additionally, Chase does credit card consolidation, which helps improve your financial health, lowering the interest rate on your debt and reducing the amount of debt you must pay each month.
Do Banks Do Debt Consolidation Loans?
Yes, banks offer debt consolidation loans. These loans from banks help simplify how you pay off your debts and combine all your debt into one platform.
The best banks that do debt consolidation loans in the U.S. are the U.S. bank, Bank of America, and OneMain Financial.
Bank of America Debt Consolidation Loan
Bank of America offers consolidation services that help you to consolidate your debts. The consolidations vary from those offered to low-income borrowers or those with bad credit to the ones offered to high earners with good credit scores.
Bank of America offers a clean “Sweep Program” that helps in debt consolidation loans. Also, the Bank of America provides information on consolidating debt via credit card at a lower interest rate. Also, the bank offers auto loans, medical loans, and credit cards to help you get out of debt.
An advantage of using a loan credit card is that the interest rate can be lowered to 6%. Also, the bank offers unsecured loans that help to reduce your risk, so you are not mortgaging your house, business, or personal properties.
Debt Consolidation Calculator
The Debt Consolidation Calculator helps you to determine whether it is financially wise to consolidate debts by comparing the genuine ARP (Annual Percentage Rate) of the consolidation loan to the APR of the combined debts.
Actual APR is the fee-adjusted APR and serves as the most reliable determinant of the financial cost of a loan.
The calculation results will display answers that compare repayment length, monthly payment, and total interest. Click here to calculate your debt consolidation.
How to Get Debt Consolidation
Below are the steps to take to get debt consolidation. They are:
1. Check your credit score
You have a higher chance of being approved at a lower interest rate if your credit score is good, i.e. (690 to 850), and you are more likely to win approval and get a low-interest rate on a debt consolidation loan.
If you have a bad credit score between 300 to 629, you have to take some time to build your credit, and you may qualify for a short-term lower loan.
2. List the debts and payments
The second thing to do when consolidating your loan is to list all the debt and payments and the total amount due. Add the money you pay monthly for your debts and compare them with your budget. The new loan should have a lower rate and fit into your budget.
3. Compare loan options
Do not jump to a lender; carefully compare loan options and choose the most suitable one. It can be a bank, online lender, or credit union. If you have a good credit score, you can choose banks. For more individualized personal loans, go for online lenders. Credit unions are suitable for those with fair or bad credit.
4. Apply for a loan
Apply for a loan by preparing documents such as income verification, proof of identity, and proof of address. Read the fine loan print, check out for origination fees, other fees and charges, and whether you need to add a co-signer good credit to your application.
5. Offset your debts
Once approved and funded, you can begin paying off your old debts and payments. Sometimes, your creditor right directly offsets the debt. The best thing here is to do the right way to avoid being charged additional interest.
Debt consolidation should be an issue for you. The above personal loans can be used to consolidate your debt. Ensure you check the fees, such as origination fees, interest rates, and other charges. Do not sign up for any personal loan that you don’t understand the terms and conditions.