# Qualifying For Low Interest Credit Card Consolidation
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-05-25
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Qualifying for Low Interest Credit Card Consolidation:
Meta Description: Learn how to get a debt consolidation loan with half the interest rate of what you're currently paying. Improve credit score, shop for best rates, and
URL: https://financedigest.com/qualifying-for-low-interest-credit-card-consolidationhtml

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You’ve settled on debt consolidation as a way out of stubborn credit card obligations. The only problem is that interest rates on consolidation loans vary widely – from around 5% to 36%. What you need is a loan that has a rate that’s half or less than what you’re paying. Let’s look at qualifying for [low interest](https://www.financedigest.com/interest-rates-are-cut-to-an-all-time-low-what-will-this-mean-for-small-businesses.html "Interest rates are cut to an all-time low. What will this mean for small businesses?") credit card consolidation.

**How Are Rates Determined Anyway?**

Your [credit score is key to any loan](https://www.financedigest.com/4-ways-to-get-a-bad-credit-loan.html "4 Ways to Get a Bad Credit Loan"), including personal loans used for debt consolidation. That’s because it [gives lenders a snapshot of how you handle credit](https://www.financedigest.com/smes-are-more-resilient-than-we-give-them-credit-for.html "SMEs are more resilient than we give them credit for"), and whether you’d be a good risk. If you have a high score, that says that you’re more [likely to repay a loan](https://www.incharge.org/debt-relief/debt-consolidation/how-to-get-low-interest-debt-consolidation-loan/), so your interest rate will be lower. However, a low score tells lenders that you currently have, or have had, [issues with financial](https://www.financedigest.com/how-the-financial-services-industry-can-solve-the-issue-of-vulnerable-code.html "How the financial services industry can solve the issue of vulnerable code") management. This makes it risky to lend you cash and means a higher [interest rate](https://www.financedigest.com/ecbs-centeno-says-interest-rate-close-to-peaking-if-no-new-shocks.html "ECB’s Centeno says interest rate close to peaking if no new shocks") – IF you are approved.

As of last summer, the average rate for a consolidation loan was 11.09%, and the most [common rates for people](https://www.financedigest.com/5-common-ways-people-end-up-in-debt-without-realising.html "5 Common Ways People End Up In Debt Without Realising") who had good credit ranged from 5.95% to 5.99%.

**What Exactly Are** [Interest Rates?](https://www.financedigest.com/ecb-raises-interest-rates-again-cuts-bank-subsidies.html "ECB raises interest rates again, cuts bank subsidies")

Practically speaking, [what](https://www.financedigest.com/interest-rate-and-recession-fears-knock-stocks-and-oil.html "Interest rate and recession fears knock stocks and oil") does “interest rate” mean? In a nutshell, it’s the bill you get for the privilege of borrowing. Most loans use compound interest, meaning not only do you pay interest on what you borrow, you also dole out interest on the accumulated interest. The [rate at which that debt increases](https://www.financedigest.com/rci-bank-increases-easy-access-interest-rate-to-1-02.html "Rci Bank Increases Easy Access Interest Rate To 1.02%") hinges on how frequently the loan compounds. That usually occurs monthly with [credit cards](https://www.financedigest.com/uk-credit-card-borrowing-rises-by-most-since-2005-boe.html "UK credit card borrowing rises by most since 2005 – BoE"). If you’re only making minimum or [small payments](https://www.financedigest.com/digital-britain-more-than-a-quarter-of-uk-small-businesses-now-accept-payment-apps-at-the-checkout.html "Digital Britain – More Than a Quarter of UK Small Businesses Now Accept Payment Apps at the Checkout"), that amount can add up.

**How to Get a [Low Interest Debt](https://www.financedigest.com/oil-slumps-5-to-five-week-low-amid-us-debt-default-fears.html "Oil slumps 5% to five-week low amid US debt default fears") Consolidation Loan**

First off, consolidation loans are available from large banks, [credit unions](https://www.financedigest.com/6-reasons-to-take-a-car-loan-from-a-credit-union.html "6 Reasons to Take a Car Loan From a Credit Union"), and online lenders. You want to borrow enough to cover all your debts, after which you’ll repay the lender monthly. That’s simpler than [keeping track](https://www.financedigest.com/will-mays-new-minister-percy-keep-the-northern-powerhouse-on-track-post-brexit.html "WILL MAY’S NEW MINISTER PERCY KEEP THE NORTHERN POWERHOUSE ON TRACK POST BREXIT?") of multiple bills of varying amounts and due dates.

Qualifying for [low interest credit card consolidation](https://www.bills.com/debtconsolidation/creditcardconsolidation) takes work. Shop around for the best rates. Because of the way they’re structured, [credit unions tend to have relatively low rates](https://www.financedigest.com/credit-suisse-offers-higher-deposit-rates-in-asia-to-woo-the-wealthy-sources.html "Credit Suisse offers higher deposit rates in Asia to woo the wealthy – sources"). You should also inquire at your bank, particularly if you have an [established relationship](https://www.financedigest.com/tips-for-establishing-strong-trade-relationships-overseas.html "Tips for establishing strong trade relationships overseas"). There are also online lenders you can try. What’s good about the latter is that they initially do “soft” credit checks, which [don’t hurt your credit](https://www.financedigest.com/12-things-that-dont-hurt-your-credit-score.html "12 Things That Don’t Hurt Your Credit Score").

Here are some steps you should take in applying for a consolidation loan:

- Check your [credit report](https://www.annualcreditreport.com/index.action) to be certain there are no inaccuracies, since some errors could be dragging down your score.
- Do what you can to improve your [credit score](https://www.financedigest.com/1-in-5-uk-adults-have-no-idea-what-a-credit-score-is.html "1 in 5 UK adults have no idea what a credit score is"). Even a small [increase can save](https://www.financedigest.com/christmas-saved-for-expats-flights-frequency-to-increase-by-256.html "Christmas saved for expats: Flights frequency to increase by 256%") you cash.
- Specify how much you want to borrow. While you don’t want to borrow too much – that may get you into spending trouble – you want to be sure you have enough to cover your debts.
- Be sure you’re aware of fees such as an early termination or origination fee. Excessive fees could unduly offset savings from a favorable [interest rate](https://www.financedigest.com/ecb-firms-up-expectations-for-july-interest-rate-hike.html "ECB firms up expectations for July interest rate hike").
- Make certain you understand how the process works, including how long it will likely take for your [loan to be processed](https://www.financedigest.com/montenegro-eu-admission-process-paved-by-loan-from-brussels.html "Montenegro EU Admission Process Paved by Loan from Brussels"). Don’t hesitate to ask questions.

**Improving Your** [Credit Score](https://www.financedigest.com/benefits-of-a-good-credit-score.html "Benefits of a good credit score")

As we’ve discussed, the best [interest rates](https://www.financedigest.com/interest-rate-hold-signals-confidence-in-uk-economy.html "Interest rate hold signals confidence in UK economy ") require good scores – 740 or higher. If your score is below 660, you’re going to get a [higher rate](https://www.financedigest.com/wall-st-heads-higher-as-fed-rate-hopes-dent-dollar.html "Wall St heads higher as Fed rate hopes dent dollar"). Here’s what you need to do to get a better credit score:

- Keep up with bill payments.
- Try to pay off your balances monthly.
- Establish auto pay to be sure you don’t miss a payment.
- Keep credit [card](https://www.financedigest.com/more-bang-for-your-buck-with-debenhams-credit-card.html "More Bang For Your Buck with Debenhams Credit Card") balances at less than 30% of your credit limit.
- Don’t apply for new credit.
- Dispute mistakes on your [credit report](https://www.financedigest.com/equiniti-credit-services-investigates-consumer-attitudes-to-lending-in-new-report.html "Equiniti Credit Services investigates consumer attitudes to lending in new report").

If you’ve gotten yourself into a financial mess, qualifying for low interest credit card consolidation may not be easy. Still, it can be done. Follow the [steps above and you’ll likely put yourself in a better financial](https://www.financedigest.com/four-steps-to-mastering-financial-agility.html "Four steps to mastering financial agility ") position.

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