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Loans

Here are the 5 best loans for refinancing credit card debt

CNBC Select rounded up the top personal loans to help you dig out of debt, looking at fees, interest rates and flexible repayment options for different credit scores.

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Credit card debt is common, but paying high interest rates on your balance can get expensive. According to the Fed, credit cards have an average APR of 16.28%, and your cards might have higher or lower interest rates depending on your credit score and other factors. Even some of the cards on our best credit cards list charge APRs up to 25%.

The average personal loan APR is currently 9.65%. While a balance transfer card with a long 0% APR might be a cheaper way to pay off your credit card debt, there are still some benefits to paying off a big balance (or multiple balances) with a personal loan.

These loans are considered installment credit, which means you pay the same amount each month until the loan is paid off. Knowing the exact amount you have to pay monthly can make it easier to budget, whereas with a balance transfer card, you have to set up your own repayment plan. And if you don't pay off your balance before the intro period ends, you'll get hit with high interest rates.

If you're looking to transfer your debt to a fixed-rate personal loan, CNBC Select reviewed dozens of personal loan lenders and chose the best five for refinancing debt. We looked for no-fee loans whenever possible, but took into account flexible choices for people with fair credit. (Read more about our methodology below.)

Here are the top five personal loans for refinancing your debt.

CNBC Select's picks for the top personal loans to refinance your credit card debt

Personal loan FAQs

Best overall

SoFi Personal Loans

On Sofi's secure site
  • Annual Percentage Rate (APR)

    5.99% to 22.56% when you sign up for autopay

  • Loan purpose

    Debt consolidation/refinancing, home improvement, relocation assistance or medical expenses

  • Loan amounts

    $5,000 to $100,000

  • Terms

    2 to 7 years

  • Credit needed

    Good to excellent

  • Origination fee

    None

  • Early payoff penalty

    None

  • Late fee

    None

See our methodology, terms apply.

Pros

  • No origination fees, no early payoff fees, no late fees
  • Unemployment protection if you lose your job
  • DACA recipients can apply with a creditworthy co-borrower who is a US Citizen/permanent resident by calling 877-936-2269
  • Can have more than one SoFi loan at a time (state-permiting) 
  • May accept offer of employment (to start within the next 90 days) as proof of income
  • Co-applicants may apply

Cons

  • Applicants who are U.S. visa-holders must have more than two years remaining on visa to be eligible
  • No co-signers allowed (co-applicants only)

Best for good to excellent credit

LightStream Personal Loans

On LightStream's secure site
  • Annual Percentage Rate (APR)

    2.49% to 19.99%* when you sign up for autopay

  • Loan purpose

    Debt consolidation, home improvement, auto financing, medical expenses, wedding and others

  • Loan amounts

    $5,000 to $100,000

  • Terms

    24 to 144 months*

  • Credit needed

    Good

  • Origination fee

    None

  • Early payoff penalty

    None

  • Late fee

    None

See our methodology, terms apply.

Pros

  • Same-day funding available through ACH or wire transfer
  • Loan amounts up to $100,000
  • No origination fees, no early payoff fees, no late fees
  • LightStream plants a tree for every loan

Cons

  • Requires several years of credit history
  • No option to pay your creditors directly
  • Not available for student loans or business loans
  • No option for pre-approval on website (but pre-qualification is available on some third-party lending platforms)

Best for fair/average credit

Upstart Personal Loans

Information about Upstart Personal Loans has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. All loans are from Upstart-powered bank partners. Loans in MD and NV are by Cross River Bank, an FDIC New Jersey state chartered commercial bank.
  • Annual Percentage Rate (APR)

    8.27% to 35.99%

  • Loan purpose

    Debt consolidation, credit card refinancing, home improvement, wedding, moving or medical

  • Loan amounts

    $1,000 to $50,000

  • Terms

    Three and five years

  • Credit needed

    FICO or Vantage score of 620 (but will accept applicants with applicants with insufficient credit history to have a score)

  • Origination fee

    0% to 8% of the target amount

  • Early payoff penalty

    None

  • Late fee

    The greater of 5% of monthly past due amount or $15

See our methodology, terms apply.

Pros

  • Open to borrowers with fair credit (minimum 620 score)
  • Will accept applicants with insufficient credit history to have a credit score
  • No early payoff fees
  • 99% of personal loan funds are sent the next business day after completing required paperwork before 5pm Monday through Friday

Cons

  • Late fee of 5% of monthly past due amount or $15
  • Origination fee of 0% to 8% of the target amount (automatically withheld from the loan before it's delivered to you)
  • $10 fee to request paper copies of loan agreement (no fee for eSigned virtual copies)
  • Must have a social security number

Best for paying creditors directly

Marcus by Goldman Sachs Personal Loans

On the Marcus by Goldman Sachs secure site
  • Annual Percentage Rate (APR)

    6.99% to 19.99% APR when you sign up for autopay

  • Loan purpose

    Debt consolidation, home improvement, wedding, moving and relocation or vacation

  • Loan amounts

    $3,500 to $40,000

  • Terms

    36 to 72 months

  • Credit needed

    Good

  • Origination fee

    None

  • Early payoff penalty

    None

  • Late fee

    None

See our methodology, terms apply.

Pros

  • No origination fees, no early payoff fees, no late fees
  • Will send direct payment to up to 10 creditors (for debt consolidation)

Cons

  • Does not accept joint applications and/or cosigners

Best for next-day funding

Discover Personal Loans

Information about Discover Personal Loans has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Discover Bank USA is a Member FDIC.
  • Annual Percentage Rate (APR)

    6.99% to 24.99%

  • Loan purpose

    Debt consolidation, home improvement, wedding or vacation

  • Loan amounts

    $2,500 to $35,000

  • Terms

    6 to 84 months

  • Credit needed

    Good

  • Origination fee

    None

  • Early payoff penalty

    None

  • Late fee

    $39

See our methodology, terms apply.

Pros

  • No origination fees, no early payoff fees
  • Same-day decision (in most cases)
  • Option to pay creditors directly
  • 7 different payment options from mailing a check to pay by phone or app

Cons

  • Late fee of $39
  • No autopay discount
  • No cosigners or joint applications

Personal loan FAQs

1. What are the benefits of refinancing debt?

If you carry a balance on a credit card (or multiple cards) with a high APR, you might want to consider debt refinancing. Simply put, you take out a new loan to pay off old debt, then pay back the new debt according to agreed-upon terms. It makes sense to refinance if you can't afford your current bill payments and need to find a lower monthly plan, or if your credit score is good enough to qualify you for a lower APR, which makes paying off the debt cheaper.

For example, say you have a $10,000 balance on your credit card that charges interest at a rate of 24.99% APR. Assuming you can afford to make $400 monthly payments, it would take about three years to pay your balance off entirely. You'll also pay about $4,000 in interest, according to Experian's debt payoff calculator.

On the other hand, transferring that debt to a personal loan with a 9% APR, can save you more than $3,000. Experian's calculator estimates with the same monthly payment ($400) and the lower APR, you can pay off the balance in 22 months and only pay $875 in interest charges overall.

When you apply for a personal loan, you should consider the APR and the loan's term, or the length of time it will take you to pay it off. Make sure the monthly loan repayment amount fits into your budget, so you're able to comfortably pay off the loan and get your debt under control.

2. Can debt refinancing hurt your credit score?

At its best, debt refinancing can boost your credit score by making your monthly payments more affordable and motivating you to pay off your balances. But they aren't entirely risk-free. Personal loan applications require a credit check, so you'll want to make sure you know your credit score before you apply. There's no direct penalty for getting denied a loan, but having too many applications on your credit record could be a red flag to future lenders.

For debt refinancing to work, you have to "plan your work and work your plan," so to speak. It helps to be honest about your money habits and the overall state of your personal finances before taking on any loan. Personal loans deliver cash directly to your bank account, making it easy to stay in debt if you're not careful. If you have concerns, opt for a loan that pays your creditors directly so that there's no opportunity for you to overspend. And before you agree to a new loan, make sure you have room in your budget to pay it back on time and in full according to the terms. A late payment on your personal loan can hurt your credit score just like if you miss a credit card bill.

3. What is a good interest rate on a personal loan?

Most personal loans come with fixed-rate APRs, so your monthly payment stays the same for the loan's lifetime. In a few cases, you can take out a variable-rate personal loan. If you go that route, make sure you're comfortable with your monthly payments changing if rates go up or down.

Personal loan APRs average 9.65%, according to the Fed's most recent data. Meanwhile, the average credit card interest rate is around 16.28%. When considering whether to invest or pay off debt, consider that the average rate of return in the stock market tends to be above 5% when adjusted for inflation. So if you can find a personal loan with interest rates would be below 5%, you can slowly pay off your debt while also investing because you know your investments could still earn more than you're paying in interest.

However, it's not always easy to qualify for personal loans with interest rates lower than 5% APR. Your interest rate will be decided based on your credit score, credit history and income, as well as other factors like the loan's size and term.

4. How do personal loans work?

Once you're approved for a personal loan, the cash is usually delivered directly to your checking account. However, if you opt for a debt consolidation/refinancing loan, you can sometimes have your lender pay your credit card accounts directly. Any extra cash leftover will be deposited into your bank account or returned to the lender.

Most loan terms range anywhere from six months to seven years. The longer the term, the lower your monthly payments will be, but they usually also have higher interest rates. It's best to elect for the shortest term you can afford. When deciding on a loan term, consider how much you will end up paying in interest overall.

Your monthly loan bill will include your installment payment plus interest charges. If you think you may want to pay off the loan earlier than planned, be sure to check if the lender charges an early payoff or prepayment penalty. Sometimes lenders charge a fee if you make extra payments to pay your debt down quicker, since they are losing out on that prospective interest. The fee could be a flat rate, a percentage of your loan amount or the rest of the interest you would have owed them. 

Once you receive the money from your loan, you have to pay back the lender in monthly installments, usually starting within 30 days.

When your personal loan is paid off, the credit line is closed and you no longer have access to it.

5. How is my personal loan rate decided?

As you shop for a low-interest loan or credit card, remember that banks are looking for reliable borrowers who make timely payments. Financial institutions will look at your credit score, income, payment history and, in some cases, cash reserves when deciding what APR to give you.

To get approved for any kind of credit product (credit card, loan, mortgage, etc.), you'll first submit an application and agree to let the lender pull your credit report. This helps lenders understand how much debt you owe, what your current monthly payments are and how much additional debt you have the capacity to take on.

Once you submit your application, you may be approved for a variety of loan options. Each will have a different length of time to pay the loan back (your term) and a different interest rate. Your interest rate will be decided based on your credit score, credit history and income, as well as other factors like the loan's size and term. Generally, loans with longer terms have higher interest rates than loans you bay back over a shorter period of time.

Our methodology

To determine which personal loans are the best for refinancing debt, CNBC Select analyzed dozens of U.S. personal loans offered by both online and brick-and-mortar banks, including large credit unions, that come with no origination or sign-up fees, fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.

When narrowing down and ranking the best personal loans, we focused on the following features:

  • Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan's term, which means your monthly payment won't vary, making your budget easier to plan.
  • Flexible minimum and maximum loan amounts/terms: Each lender provides more than one financing option that you can customize based on your monthly budget and how long you need to pay back your loan.
  • No early payoff penalties: The lenders on our list do not charge borrowers for paying off loans early.
  • Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process. 
  • Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
  • Fund disbursement: The loans on our list deliver funds promptly through either electronic wire transfer to your checking account or in the form of a paper check. Some lenders (which we noted) offer the ability to pay your creditors directly.
  • Autopay discounts: We noted the lenders that reward you for enrolling in autopay by lowering your APR by 0.25% to 0.5%.
  • Creditor payment limits and loan sizes: The above lenders provide loans in an array of sizes, from $1,000 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a preapproval process can give you an idea of what your interest rate and monthly payment would be for such an amount.

Note that the rates and fee structures advertised for personal loans are subject to fluctuate in accordance with the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.

*Your LightStream loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 3.99% APR with a term of three years would result in 36 monthly payments of $295.20.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.