Can I still use my credit card after debt consolidation? (2024)


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By CreditNinjaReviewed by Izzy MEdited by Matt Mayerle

Modified on January 19, 2024

While you can still use your open credit card accounts after debt consolidation, consumers should do so with caution. If you do use your credit card after debt consolidation, be sure to pay off your balance regularly. Accumulating too much credit card debt may defeat the purpose of consolidating debt in the first place. According to USA Today, the average American household carries about $7,951 in credit card debt in a year.1

Paying off your credit card, whether it’s with a debt consolidation loan or not, does not actually cancel the card. While it does bring your balance down to zero, the card will still be open and active. If you want to cancel your card you would need to alert the credit card company. But leaving it open could have some financial benefits.

For many people in America, credit card debt is an everyday issue. It makes sense, as credit cards are easy to use, and provide customers with money that they may not actually have in their bank account. It’s very appealing to be able to purchase whatever you want at a moment’s notice. But it often leads to unmanageable amounts of debt that can affect your finances for years to come.

Debt Consolidation Loans for Credit Card Debt

Many borrowers who find themselves in a large amount of credit card debt with several different cards turn to debt consolidation loans. A debt consolidation loan is any large personal loan that a borrower uses to pay off several other smaller debts. This allows the borrower to focus on one monthly payment instead of several from a number of different cards and accounts. In other words, it simplifies your finances and makes budgeting and planning easier.

But should you cancel your credit cards if you consolidate debt? Some would say no. By leaving your credit cards open, with a zero balance, it shows the credit bureaus that you have access to credit but are not using it. This could potentially help your credit score. This is referred to as your credit utilization ratio. It’s the measure of how much credit is available to you versus how much you’re using. Keeping a low credit utilization ratio shows the credit bureaus and lenders that you’re financially responsible.

However, if leaving these cards open will lead you to use them again, then it may not be worth the risk. We’d recommend leaving them open and then cutting up the cards so you don’t have access to them anymore, and won’t be tempted to use them again. Regardless, make sure you’re aware of your utilization ratio, and try to keep it low.

Managing Multiple Debts

In the context of managing multiple debts, it’s essential to understand the impact of the debt consolidation process on your credit report. For homeowners, a home equity loan might be an attractive option due to potentially lower interest rates compared to other forms of credit. Credit unions often offer favorable terms for such loans, making them a viable choice for consolidating multiple credit card balances.

Additionally, a balance transfer credit card can be a strategic tool for managing debt, allowing you to transfer and consolidate debts from various credit card accounts into one with a potentially lower interest rate. However, it’s crucial to approach this method with caution, as it requires discipline to manage the new credit line effectively and avoid further debt accumulation. Whichever method you choose, regularly monitoring your credit report is vital to understand how these financial decisions impact your credit health.

Check out the CreditNinja dojo for more free resources and information about credit cards, debt consolidation, and more!


  1. What is the average credit card debt? | USA Today

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Can I still use my credit card after debt consolidation? (2024)


Can I still use my credit card after debt consolidation? ›

If a credit card account remains open after you've paid it off through debt consolidation, you can still use it. However, running up another balance could make it difficult to pay off your debt consolidation account.

How long does it take your credit to recover from debt consolidation? ›

Debt consolidation itself doesn't show up on your credit reports, but any new loans or credit card accounts you open to consolidate your debt will. Most accounts will show up for 10 years after you close them, and any missed payments will show up for seven years from the date you missed the payment.

Can I use my credit card after debt relief? ›

The short answer is Yes, people are generally allowed to use their credit cards after debt consolidation as it does not typically involve closing credit card accounts.

What happens after debt consolidation? ›

Once your debt is consolidated, you only make payments on that one loan, rather than multiple credit cards. Often, the interest rate on a debt consolidation loan is lower than on the credit cards that are paid off. Debt consolidation loans are not the same as debt relief programs.

Does using a debt consolidation service hurt your credit? ›

If you do it right, debt consolidation might slightly decrease your score temporarily. The drop will come from a hard inquiry that appears on your credit reports every time you apply for credit. But, according to Experian, the decrease is normally less than 5 points and your score should rebound within a few months.

What happens to my credit after the debt relief program? ›

Debt relief through a debt management plan

Your credit card accounts will be closed and, in most cases, you'll have to live without credit cards until you complete the plan. (Many people do not complete them.) Debt management plans themselves do not affect your credit scores, but closing accounts can hurt your scores.

Does debt consolidation give you bad credit? ›

However, credit cards and personal loans are considered two separate types of debt when assessing your credit mix, which accounts for 10% of your FICO credit score. So if you consolidate multiple credit card debts into one new personal loan, your credit utilization ratio and credit score could improve.

Can I still use my credit card with debt consolidation? ›

If a credit card account remains open after you've paid it off through debt consolidation, you can still use it. However, running up another balance could make it difficult to pay off your debt consolidation account.

Should I close my credit card after debt consolidation? ›

Can I use debt consolidation without closing credit cards? Yes, although it depends on your situation. If you have good credit and a limited amount of debt, you probably won't need to close your existing accounts. You can use a balance transfer or even a debt consolidation loan without this restriction.

How long after debt consolidation can I buy a car? ›

No, debt consolidation doesn't affect buying a car.

Still, in scenarios where the company wants to purchase the car by securing a loan, it may be affected by the debt arrears, which are part of the considerations creditors consider before giving out loans.

What happens at the end of consolidation? ›

Finally at the end of consolidation the stress increment is completely transferred to soil grains and only hydrostatic pore pressure exists. So effective stress is maximum at the end of consolidation. Q. For a certain loading condition, a saturated clay layer undergoes 40% consolidation in a period of 178 days.

How do I build my credit after consolidation? ›

8 Steps to Rebuild Your Credit
  1. Review Your Credit Reports. ...
  2. Pay Bills on Time. ...
  3. Lower Your Credit Utilization Ratio. ...
  4. Get Help With Debt. ...
  5. Become an Authorized User. ...
  6. Get a Cosigner. ...
  7. Only Apply for Credit You Need. ...
  8. Consider a Secured Card.
Nov 2, 2023

What are 4 things debt consolidation can do? ›

Four types of debt are commonly consolidated: credit card debt, student loan debt, medical debt and high-interest personal loan debt. You may reduce the overall cost of repayment by securing better terms and interest. You'll also have a single payment to keep track of instead of several.

How long does debt consolidation stay on your record? ›

If you take out a debt consolidation loan, it will stay on your credit report for as long as the loan is open. If you make payments on your loan and keep it in good standing, this can be a good thing. However, if you miss a payment, later payments can stay on your credit report for up to seven years.

What is the catch with debt consolidation for the consumer? ›

You may pay a higher rate

Your debt consolidation loan could come with more interest than you currently pay on your debts. This can happen for several reasons, including your current credit score. If it's on the lower end, lenders see you as a higher risk for default.

What is the minimum credit score for a debt consolidation loan? ›


The minimum credit score needed to secure a debt consolidation loan ranges from 580 to the mid-600s, depending on the lender. The best terms and rates go to borrowers with scores that are around 700 or higher.

How long after a debt management plan can I get credit? ›

The 6-Year Mark in a DMP

In the UK, most negative information stays on your credit report for 6 years. This includes missed or late payments, defaults, and other markers of financial difficulty. Therefore, after 6 years, these markers start to disappear from your credit file, which can improve your credit rating.

How long after paying collections will credit score improve? ›

Collection accounts may affect your credit scores and may stay on your credit reports for up to seven years. Paying off collection accounts can have a lot of benefits, including potentially improving some of your credit scores.

Does debt restructuring hurt your credit? ›

Can damage your credit: Restructuring debt can negatively affect your credit in many ways, especially since you're no longer paying your account as agreed. If your lender marks the debt as settled — meaning that it was paid in full, but for less than you originally owed — it can impact your score for years to come.


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