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How to Get Out of Debt Fast in 2026: A Step-by-Step Guide
May 4, 2026
May 4, 2026
The average American household carries $6,000 in credit card debt at an average APR of 21%, according to the Federal Reserve — costing roughly $1,260 in interest annually without making meaningful progress on the principal. Debt consolidation can cut that interest burden and combine multiple payments into one, helping you pay off debt faster. Six proven strategies can help — from personal loans and balance transfers to home equity and debt management plans — each suited to a different credit profile and debt load.
If you're having trouble keeping up with multiple payment deadlines each month or can't get ahead of high interest rates, consolidation may make sense for your situation. Verify the credentials of any debt consolidation company through the CFPB's consumer complaint database before enrolling.
Debt consolidation speed depends on existing terms and chosen strategy.
Debt consolidation combines multiple debts into a single debt you manage with one creditor. There are several concrete advantages to consolidating:
You can save money on interest when you qualify for a lower rate than you're currently paying.
You can more easily track your debts by combining multiple monthly payments into one.
You can improve your credit score over time through consistent on-time payments.
When your consolidated debt carries a lower interest rate, more of each monthly payment goes toward principal rather than interest — accelerating your payoff timeline.
Keep in mind that debt consolidation won't automatically make you pay debts off faster. The time it takes to repay depends on the timeline of your existing debts and the repayment terms of the consolidation option you choose. Extending your repayment term to lower monthly payments can actually increase total interest paid over the life of the loan.
The right strategy depends on your credit score, the types of debt you carry, and how aggressively you can commit to monthly payments. Here are six proven approaches:
Debt consolidation loans let you combine multiple debts into a single loan from one lender with a fixed interest rate and fixed monthly payments. You borrow in one lump sum and use it to repay all your creditors — or the lender pays them directly. You then repay the lender with a single monthly payment over the loan term, typically one to five years.
Personal loan APRs typically range from 7%–36% — compared to the 21% average credit card APR, according to the Federal Reserve. Borrowers with good or excellent credit scores qualify for the lowest rates.
Debt consolidation loans can combine all your debts into one payment with hopefully a lower interest rate. This can structure your debt payoff into one payment and can be a decent option for someone who wants to simplify their debt process.
Debt consolidation loans may extend the time you're paying off debt if you choose a longer repayment term. However, you can typically make payments above the minimum to shorten the repayment period — check for prepayment penalties before signing.
Balance transfer credit cards allow you to move current balances to a new card with a special introductory low interest rate. Borrowers with good or excellent credit can qualify for rates as low as 0% for a promotional period — typically six months to over a year, depending on the card.
Once the promotional period expires, the regular interest rate applies to any remaining balance. Pay off the full balance before that happens to capture the full interest savings.
Balance transfer fees of 3%–5% typically cost $30–$50 per $1,000 transferred — calculate whether the fee is offset by the interest savings before applying. On a $5,000 balance at a 5% fee, you'll pay $250 upfront. If that $250 saves you $800 in interest during the 0% period, the transfer is worthwhile. A few cards offer free balance transfers — worth prioritizing if you qualify.
Per the CFPB, avoid making new purchases on the transfer card — most cards apply payments to the lower-rate balance first, meaning new purchases accrue interest at the regular rate while your transferred balance is paid down.
Homeowners can use their home equity — the difference between their home's current value and the amount they owe on the mortgage — to take out a home equity loan or a home equity line of credit (HELOC).
Home equity loans provide a lump sum at a fixed interest rate with fixed monthly payments. You use the funds to pay off your existing debts, then repay the home equity loan over a set term.
HELOCs provide a revolving line of credit with a variable interest rate and fluctuating monthly payments. You draw from the line as needed to pay debts, then repay over time.
Home equity loan rates typically range from 7%–9% as of early 2026 — significantly lower than unsecured personal loans for the same borrower, according to CFPB consumer data. This makes them one of the most cost-effective consolidation options for homeowners with significant equity.
The risk: if you're already struggling to make debt payments, tying another loan to your home could put you at risk of foreclosure if you default. Additionally, if home values drop, you could end up owing more than your home is worth.
Debt settlement companies negotiate with your creditors to accept lower payoff amounts than what you owe. Once you accept a settlement and enroll in a program, you make a single monthly payment to the settlement company, which manages disbursement to your creditors.
The potential advantage is reducing the total amount you owe — which can help you pay off debts faster. Many debt settlement companies claim their customers resolve debts within 24–48 months.
However, the downsides are significant. Settlement companies typically charge fees of up to 25% of enrolled debt — on a $10,000 debt, a 25% fee equals $2,500. Verify that the negotiated reduction exceeds this cost before enrolling. Settlement companies often advise you to stop making payments to creditors during negotiations, which causes serious credit score damage. There is no guarantee the company will succeed in negotiating a reduction.
NFCC-affiliated nonprofit credit counseling agencies can set up a structured debt management plan (DMP) that negotiates better payment terms, lower interest rates, and a structured repayment schedule — typically three to five years.
Once a DMP is established, you make a single monthly payment to the credit counseling agency, which distributes funds to your creditors. Unlike debt settlement, DMPs don't require you to stop making payments — preserving your credit during the process. DMPs can cost nothing or may require a setup fee and modest ongoing monthly fees.
You'll typically need to close any credit card accounts included in your DMP, which can temporarily reduce your credit score. You also generally can't open new loans or credit cards while enrolled. The payoff: structured lower-rate repayment with nonprofit oversight rather than a for-profit company.
Borrowers with an employer-sponsored 401(k) can borrow from their retirement savings to pay off existing debts, then repay the loan over up to five years — if their plan administrator allows it.
401(k) loan interest rates are typically low, and the interest you pay goes back into your own retirement account rather than to a lender. There is no credit check, making this option accessible regardless of credit score.
Borrowing from a 401(k) usually results in a low-interest loan, and the interest is paid back to yourself. Now, you are borrowing against your future, so you are limiting the earnings you could get on those funds, but that is often a small price to pay compared to dealing with high credit card debt and/or debt collection.
The risks are real. You reduce your 401(k) balance and limit potential future earnings through compound interest. Per IRS rules, if you fail to repay the loan according to its terms, the unpaid amount is treated as a plan distribution — subject to income tax and a 10% early withdrawal penalty if you're under 59½. If you leave your job, you may be required to repay the loan in full immediately.
An alternative is taking early withdrawals from your 401(k) to eliminate debts outright — but withdrawals before age 59½ are subject to income tax plus the 10% early withdrawal penalty. Use this option only as a last resort when other consolidation strategies are unavailable.
The right consolidation strategy depends on your credit score, the types of debt you carry, and how aggressively you can commit to monthly payments. No strategy automatically pays your debt off faster — the common thread across all six is making consistent, on-time payments and contributing more than the minimum whenever possible.
» Ready to start? Compare top-rated debt consolidation loans and see what rate you qualify for today.
What is the quickest method to get out of debt?
The quickest way to get out of debt depends on how much you owe, what types of debts you have, and what interest rates you're paying. Generally, the most consistently effective approach is to combine a lower-rate consolidation strategy with above-minimum monthly payments — reducing your principal faster and shortening your repayment timeline.
What is the best method for debt consolidation?
Two of the most accessible options for borrowers with good credit (670+) are debt consolidation loans and balance transfer credit cards, which combine multiple high-interest debts into a single obligation at a lower rate. For borrowers with poor credit or overwhelming debt, nonprofit debt management plans through the NFCC offer structured repayment without requiring strong credit.
Is debt consolidation the best way to get out of debt?
For many borrowers, debt consolidation is the most practical path. It may be the right fit if you have trouble tracking multiple monthly payments, can qualify for a lower interest rate, or need a different repayment timeline than your current debts allow. It's less effective if you can't secure a meaningfully lower rate or if the root cause of your debt is a spending pattern that hasn't changed.
Brian Acton is a seasoned personal finance journalist at BestMoney.com who specializes in loans and debt consolidation. His work has appeared in The Wall Street Journal, TIME, USA Today, MarketWatch, Inc. Magazine, HuffPost, and other notable outlets.
