How to Get Out of Debt Fast in 2026: A Step-by-Step Guide
How to Get Out of Debt Fast in 2026: A Step-by-Step Guide
Six ways to cut what you pay in interest, matched to your credit score and what the lender told you
Written by
Brian Acton
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.
Credit card APRs at commercial banks averaged 21.19% in the third quarter of 2026, according to theFederal Reserve's G.19 release (Oct. 7, 2026). Americans carried $1.26 trillion in card balances in the second quarter, per theNew York Fed's Q2 2026 household debt report (Aug. 11, 2026). On a $6,000 balance at 21.19%, for example, you'd pay about $1,270 in interest a year 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 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. Start bycomparing debt consolidation options to see which ones fit your debt.
Juggling several due dates takes a toll.BestMoney's 2026 debt consolidation survey found 56% of U.S. adults have missed a payment or paid late because they lost track of it. And 70% say combining debts into one payment would reduce their financial stress.
An industry leader for resolving unsecured debts
Timing matters, too. The Federal Reserve raised its benchmark rate on Sept. 16, 2026, to a target range of 3.75% to 4%, according to theFed's policy statement. Variable-rate debt like credit cards and HELOCs can get more expensive, so locking in a lower fixed rate matters more now.
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.
If a lender turns you down, this guide shows you how to find out why and what to do next. Jump towhat to do after a loan denial.
Key Insights
Debt consolidation simplifies payments and may lower interest, allowing faster debt repayment.
Six main debt consolidation strategies exist, each with unique features and benefits.
Paying extra toward your debts each month can shorten your payoff timeline.
Debt consolidation speed depends on existing terms and chosen strategy.
Denied? Lenders must tell you why or how to ask. Read your adverse action notice before you reapply.
The Fed raised rates in September 2026, so locking a lower fixed rate on variable-rate card debt matters more.
What Is Debt Consolidation and How Can It Help You Pay Off Debt Faster?
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.
Which Consolidation Strategy Can Get You Out of Debt Faster?
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 approaches:
The table below sums up how the six strategies compare, based on the details in each section that follows.
Borrowers whose plan allows loans, since there's no credit check
Lost potential earnings on your retirement savings
Income tax plus a 10% penalty under 59½ if you don't repay
Strategy 1: How Can a Debt Consolidation Loan Help You Pay Off Debt Faster?
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.
In the third quarter of 2026, the average 24-month personal loan rate at commercial banks was 11.90%, compared with 21.19% on credit card accounts. That's according to theFederal Reserve's G.19 terms of credit data (released Oct. 7, 2026). 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," says debt and bankruptcy attorneyAshley Morgan of Ashley F. Morgan Law, PC.
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.
No upfront costs or obligation
Strategy 2: How Can a Balance Transfer Credit Card Cut Your Interest?
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.
TheCFPB (Sept. 2, 2026) warns that the promotional rate on most balance transfers lasts a limited time. After that, your rate may rise and increase your payment, and you'll probably pay a transfer fee. To keep your payoff on track, avoid making new purchases on the transfer card.
Strategy 3: Should You Use a Home Equity Loan or HELOC to Consolidate Debt?
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.
A home equity loan may carry a fixed or adjustable rate, while HELOCs usually have adjustable rates, according to theCFPB (last reviewed Aug. 28, 2026). If you already have a mortgage, either one is a second mortgage. The bank prime loan rate stood at 7.00% on Oct. 23, 2026, after the Fed's Sept. 16 rate hike, per theFed's H.15 release.
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.
Strategy 4: How Do Debt Settlement Companies Reduce What You Owe?
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.
Be wary of any company that wants fees before it settles a debt. On Oct. 21, 2026, a federal court permanently banned the operators of an alleged debt relief scheme that collected illegal advance fees, according to theFTC.
Strategy 5: How Does a Debt Management Plan (DMP) Work?
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.
Strategy 6: Should You Tap Your 401(k) to Pay Off Debt?
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.
You Pay the Interest to Yourself
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.
Ashley MorganDebt and Bankruptcy AttorneyAshley F. Morgan Law, PC
The risks are real. You reduce your 401(k) balance and limit potential future earnings through compound interest. PerIRS 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.
What Should You Do If You're Denied for a Debt Consolidation Loan?
We know a denial hurts when money's already tight, so start simple: find out exactly why you were denied, then fix that one issue. If you can't fix it right away, switch to an option that doesn't require new credit.
You're not alone. In theNew York Fed's SCE Credit Access Survey (June 2026), about 1 in 6 credit applicants (16.1%) were rejected in the past year. That's down from 23.1% a year earlier.
The lender isn't sure you can keep up with payments
List and document every income source, or consider a cosigner
Thin or damaged credit history
There isn't enough positive history to judge you
Check your credit report for errors, then try abalance transfer only if your score qualifies
No collateral
An unsecured loan looks too risky for this lender
Consider a secured loan, weighing the risk to your asset
Why Do Lenders Deny Debt Consolidation Loans?
Lenders usually deny debt consolidation loans because of your credit score, debt-to-income ratio (DTI), income or credit history. A low score is a common hurdle.Experian (Sept. 22, 2026) says it may be hard to get a loan that improves your financial position if your FICO Score is below 580.
Higher scores give you better options, Experian notes. See where you stand with our guide tocredit score ranges.
Your DTI is the share of your gross monthly income that goes to debt payments. If you earn $5,000 a month and pay $2,000 toward debts, your DTI is 40%. Cut those payments to $1,500 and it drops to 30%. Check your own number with ourDTI calculator.
What Should You Do Right After a Loan Denial?
Read your adverse action notice first, and hold off on new applications. UnderRegulation B, a lender that denies you must give you the specific reasons or tell you that you can ask for them. If you ask within 60 days, the lender has 30 days to respond.
If your credit report played a role, the lender must tell you about your right to a free copy of that report within 60 days. It must also explain how to fix mistakes, according to theCFPB (Dec. 31, 2024).
Read the Letter Before Reapplying
Most people throw that letter away. Read it. It tells you whether you have a credit problem, an income problem, or a debt-load problem, and each one has a completely different fix. Applying to three more lenders without reading that letter is just collecting hard inquiries and punishing your score out of panic.
How Can You Improve Your Approval Odds Before Reapplying?
Lower your balances and DTI, document steady income, and prequalify before you formally apply. Amounts owed make up 30% of a FICO Score and new credit makes up 10%, according tomyFICO. In plain terms, what you owe carries three times the weight of recent applications.
Pay down card balances to lower both your amounts owed and your DTI.
List every income source on your application and bring documentation.
Ask a cosigner only if they understand they're responsible if you don't pay.
Consider a secured loan, knowing you could lose the collateral if you default.
Compare offers from credit unions, banks and online lenders.
Prequalify with soft credit checks so you can compare rates without piling up hard inquiries.
What Can You Do if You Can't Qualify for a Loan Right Now?
If you can't qualify right now, look at options that don't need new credit, such as a nonprofitdebt management plan or your creditors' hardship programs. Abalance transfer card may still work if your score qualifies. Our overview ofdebt relief programs explains which paths may fit your debt.
How Can You Avoid Scams After a Loan Denial?
Walk away from anyone who guarantees approval or wants money up front. A March 26, 2026,FTC consumer alert says only scammers ask you to pay before they settle debts or enroll you in a DMP. The FTC has also taken advance-fee operators to court, as noted inStrategy 4.
What Are the Key Takeaways for Getting Out of Debt Fast?
Interest rate is everything: Any consolidation strategy only accelerates debt payoff if it secures a lower rate than you're currently paying. Calculate your weighted average current APR before choosing a method.
Pay more than the minimum: The most consistently effective way to shorten your debt repayment timeline is to pay more than the minimum monthly payment. Even an additional $50–$100 per month on a consolidated loan can shorten your repayment period by months or years.
Match the strategy to your credit: Borrowers with good credit (670+) benefit most from balance transfers and personal loans. Borrowers with poor credit may find debt management plans more accessible. Borrowers with 401(k) savings have a no-credit-check option — but use it as a last resort given the retirement impact.
Read the denial notice first: Fix the specific issue the lender names, or choose a DMP that doesn't require new credit.
Who Is This Guide For?
This guide is for anyone juggling high-interest debt who wants a faster payoff plan, including borrowers who've been turned down for a loan.
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 a good 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 theNFCC offer structured repayment without requiring strong credit.
Is debt consolidation a good 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.
Why was I denied for a debt consolidation loan?
Most denials trace back to your credit score, DTI, income or credit history. Your adverse action notice lists the reasons or how to request them, as explained inwhat to do right after a loan denial.
What credit score do I need for a debt consolidation loan?
There's no universal minimum, but Experian says it may be hard to get a loan that improves your finances with a FICO Score below 580. Higher scores give you better options, as covered inwhy lenders deny debt consolidation loans.
Why Trust BestMoney?
You can trust this guide because it's written by Brian Acton, 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.
Every rate, fee and rule in this guide links to its original source, such as the Federal Reserve, CFPB, FTC or IRS.
How We Researched This
We built this guide from secondary sources, plus one BestMoney survey. We didn't run new tests or interviews for this update.
For rates, we used the Federal Reserve's G.19 consumer credit release (Oct. 7, 2026), its H.15 interest rate release (Oct. 23, 2026) and the Sept. 16, 2026, FOMC statement. For debt and denial trends, we used the New York Fed's Q2 2026 household debt report and its June 2026 SCE Credit Access Survey.
For borrower rights and scam warnings, we reviewed CFPB guidance, Regulation B and FTC consumer alerts and enforcement news. We also used IRS plan-loan rules, NFCC resources, myFICO and Experian education pages, and BestMoney's 2026 debt consolidation survey (Sept. 23, 2026). We checked each figure against its source on Oct. 25, 2026.
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.
