4 Simple DIY Ways to Consolidate Debt

If you’re struggling to manage multiple debts while working to become debt-free, then you know progress can be slower than you’d like. Often, it can feel as though you are trying to sail up a river without a paddle—you’re doing as much as you can, but you find yourself stuck in the same place.

As discouraging as this feeling can be, it’s not permanent. In fact, several debt management solutions can give you the paddle that you need to propel you forward on your financial journey, leaving you free from fretting over finances!

One way of achieving this is through what’s known as debt consolidation, where you take all of your debts and combine them into one monthly payment. However, debt consolidation isn’t one size fits all. Debt consolidation can take many forms—to help you find your perfect match, we’ve put together this list of 4 simple ways to consolidate your debt along with their pros and cons.

#1: Ask a Family Member or Friend for Help

Friends and family provide an excellent source of support during times of hardship. They pick you up when you’re down, offer you advice when you need it most, and cheer you on as you overcome the obstacles in your way. If you’re particularly close with a relative or a friend, it may make sense to ask them if they would be willing to lend you money to use for debt consolidation.


  • Lower interest rates: When it comes to consolidating debt, saving money plays a critical role. The lower your interest rate, the more money you’ll have available to put towards savings, retirement, or another financial goal. People you have a close, personal relationship with (i.e., your family and friends) are more likely to give you a loan with a very low interest rate, or no interest rate at all.
  • Quick and easy: This is a fast and easy way to get a loan, as you don’t have to spend time and energy filling out applications from multiple lenders and waiting for approvals.
  • Flexibility: In most cases, your family member or friend will give you favorable loan terms such as a more flexible payment schedule. Additionally, they probably won’t ask to see your credit score, which means you won’t suffer any penalties that result from a traditional lender running a check on you.
  • Credit score boost: Because it will appear as though you wiped out your debt without taking out any additional lines of credit, your score will see a boost.


  • Potential damage to your relationships: If you are having difficulties repaying the loan, there is the possibility that your relationship with your family member or friend could be strained or damaged.
  • Privacy: When you ask a close friend or relative for a loan, you’ll likely have to come clean about your financial situation and your debts, which can make for some awkward—and very personal—conversations.

Is Asking Friends and Family for Help the Best Option for Me?

Seeking out a loan from friends or family is the best option for you when:

  • You know the person has the financial resources to loan you the money, would be willing to help you and doesn’t need a fast repayment.
  • You have a good, close relationship with the potential lender and know they not only want to help you but also would be willing to forgive an occasional missed or late payment in the case of unforeseen events.
  • The lender is offering you little to no interest and a favorable repayment schedule.

#2: Balance Transfer Card

Balance transfer cards are useful when you have multiple credit card debts. These cards allow you to transfer balances from multiple accounts to one card. Often, balance transfer cards will offer a 0% APR on the balances you transfer within a set period of time.


  • Avoid interest payments: If you can pay off the balances you transferred to the card before the 0% APR introductory period expires, you may be able to avoid paying interest on the transferred balance completely.


  • Limited promotional period: The promotional period for most of these balance transfer cards is time-sensitive, and if you can’t pay off the amount you transfer within this time frame, any remaining balance will collect interest at the card’s regular rate.
  • Balance transfer fee: Be sure to read the fine print of any card you use! Some creditors will charge you a balance transfer fee, which adds to the overall debt you must repay.
  • Credit limits: Keep in mind that any amount you transfer can’t exceed your overall credit limit–and this includes any fees resulting from transfers. Depending on your credit score, this limit may not be high enough to cover all your debt.
  • Late payments can void introductory offers: If you choose this debt consolidation method, it’s crucial to make at least the minimum payments on time. If you cannot and end up making a late payment, it may cancel the introductory APR offer.

Is a Balance Transfer Card the Best Option for Me?

A balance transfer card is the right fit for you if:

  • You have multiple high-interest credit card debts, and you are transferring those balances to a low- to no interest card.
  • You know you’ll be able to make more than the minimum payment towards the debt during the introductory, low APR period.

#3: Home Equity Loan

Did you know that your house may provide you a path to debt freedom? When you seek out a home equity loan, you borrow against what’s known as the equity in your home. A home’s equity is basically the difference between your home’s value and what you owe on your mortgage. So, for example, if you owe $200,000 on your mortgage loan, and your home is worth $300,000, you have $100,000 in equity in your home. You can take out a home equity loan from an online lender, bank, credit union, or mortgage broker. The terms of this loan will depend on many factors, including your debt-to-income ratio and the amount of equity in your home.


  • Stable and low-interest rates: Home equity loans have some of the lowest interest rates (4%-7%), and these rates tend not to fluctuate. This means that you not only have a lower payment, but you also will be able to budget more accurately because your payment will be the same from month to month.
  • Longer repayment schedule: With a repayment schedule of anywhere between 15-30 years, home equity loans offer some of the most affordable monthly payments when compared to other debt consolidation methods.
  • Ability to consolidate larger debts: If your home has high equity, you may receive a larger loan that can consolidate your more significant debts.


  • Your home is at risk: Though the lump sum you potentially can get from a home equity loan is appealing, be careful not to view this option with rose-colored glasses. Because your home secures this loan, falling behind on payments puts you at risk for foreclosure. Additionally, if your home’s value falls, you may owe your lender more money than your home is worth.

Is a Home Equity Loan the Best Option For Me?

A home equity loan is a good idea when:

  • You know that your home’s value has increased since you bought it.
  • You have paid at least 20% of your mortgage.
  • You have worked to build up good financial habits that will keep you from falling into debt in the future.

#4: Personal Loan

Personal loans are loans for a specific amount of money, which you borrow and pay back monthly over an established repayment period ranging from 12-60 months. These loans have fixed interest rates, meaning that the rate you receive when you take out the loan is the rate you will pay for the entire repayment period.

When you consolidate debt with a personal loan, you use the loan sum from one lender to pay off your other debts. Once you do this, you are left with one easily manageable monthly payment.


  • Lender options: Online banking has opened up a world of possibilities when it comes to potential lenders! You now have a variety of options when pursuing a personal loan, meaning it’s easier to find the lender and loan that best meets your financial needs.
  • Budget-friendly: With a personal loan, all of your debt payments are reduced to one monthly payment, due on the same day every month. This allows you to adjust your budget to account for this payment and makes it easier to plan and save.
  • Quick debt repayment: Rather than offering a minimum monthly payment, personal loans used for debt consolidation result in a standard payment that you are required to pay each month. By ensuring you are making a significant dent in your debt each month, personal loans provide a quick and effective means of repaying debt.
  • Unsecured debt: Unlike its secured counterparts, personal loans are unsecured, meaning they’re not backed by collateral such as your car or home. This means that, if you default on a personal loan, you won’t be at risk of losing your property.


  • Credit score can impact the rates you get: Your credit score plays an important role in the interest rates and even repayment terms you get from a lender. The lower your score is, the higher your potential rates may be.
  • Some lenders tack on hidden fees: Origination fees, early repayment fees, transfer fees, oh my! Less reputable personal loan lenders will sometimes add fees on top of your monthly payments, so be sure to read the terms and conditions of your loan before signing on the dotted line.

Is a Personal Loan the Best Option for Me?

A personal loan is the best option for debt consolidation for you if:

  • The interest rate you’d receive is lower than the average interest of your other debts
  • The monthly payment resulting from the loan is affordable and budget-friendly
  • You want to pay down your debt quickly

If you feel that a personal loan is the best option to consolidate debt, consider applying with Credit Direct! You could get approved as soon as today and receive funding in 24 hours. With no hidden fees and a network of trusted partners, Credit Direct can help people of all credit levels find the loan that’s right for them. Apply online to check offers now!

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