How to consolidate debt without a loan

Use balance transfers to consolidate debt

Using a balance transfer credit card, you effectively transfer your old debts onto a new credit card. These cards typically come with low introductory rates for a set period of time. The best balance transfer cards offer a 0% annual percentage rate (APR) for up to 12 to 18 months, which means all payments go toward the principal balance during that intro period.

Balance transfer cards often have balance transfer fees between 3% and 5%.

You usually need a good credit score and solid income to qualify for a balance transfer credit card. You also can’t transfer a balance to a card from the same card issuer. For example, you couldn’t transfer debt from one Chase credit card to another with a lower interest rate.

Balance transfer cards typically come with a balance transfer fee — usually 3% to 5% of the debt you wish to transfer. If you fail to repay your credit card balance in full before the promotional APR expires, you may end up paying a higher interest rate on the remaining balance.

» LEARN: Interest rates and how they work

Consider a debt management plan

If you don’t qualify for a debt consolidation loan but still want the convenience of a single payment for all your outstanding debts, consider a debt management plan. A third-party debt relief company usually facilitates these plans. The company can help you organize and negotiate your debt payments with creditors. You then pay the debt relief company monthly for them to distribute among your creditors.

Debt management plans may help you get current with your creditors. Some debt relief companies can negotiate a lower payoff for outstanding debts. But debt management plans can come with high fees — plus some creditors refuse to work with debt relief companies. You’d still be responsible for those individual debt payments outside the plan.

You can apply for a debt management plan by contacting a debt relief company or credit counseling agency and setting up a consultation. You’ll need to provide details of your debts, including any missed payments, and review the available options. You’ll then create a budget you can stick to and a payment plan with the agency to start making regular payments on your debts.

Implement effective budgeting strategies

While not the most straightforward option, creating a budget is the most effective way to focus your efforts and pay down your debts. Ultimately, making a budget that spells out your fixed expenses, daily spending, savings and debt payoff goals can help you direct your money to the right places.

Tracking your spending every week helps you stick to the plan and make adjustments along the way. A budget is a powerful tool for debt payoff, but you need the discipline to stick to it for it to work.

One of the benefits of debt consolidation is having a single payment for all of your debts — but with a budget the goal is to just make automatic minimum payments on all debts except one. The focus on paying down one debt at a time can help you build momentum and knock out each individual debt faster.

Debt payoff methods

You can choose the debt snowball method by paying off the debt with the lowest balance first. This helps you secure quicker wins and more money for each subsequent debt after the previous one is paid off. Or you can pay off the debts with the highest interest rate first using the debt avalanche method. This ultimately saves you the most interest over the long term.

» MORE: Debt snowball vs. debt avalanche

Explore nonprofit debt consolidation options

Some nonprofits offer debt consolidation and payment plans to help you take control of your debt and improve your credit. These credit counseling agencies are one of the better alternatives to debt consolidation loans.

First, you meet with you to discuss your overall financial situation, including your debts. A credit counselor then helps you organize an agreed-upon budget and payoff timeline as part of a debt management plan.

This includes negotiating with your creditors, setting payment terms coming up with a monthly payment amount that works for your budget and your creditors. The most popular credit counseling agency is the National Foundation of Credit Counselors (NFCC).

Bottom line: You can consolidate debt without a loan

You can effectively consolidate your debts without a loan using a balance transfer credit card — or working with a debt relief company or credit counselor. Balance transfer cards work best when you have multiple credit cards with balances you can move over to the new card. Debt relief and credit counseling include creating a debt payoff plan and making a single monthly payment to the organization so they can pay off your creditors.