Discover Debt Consolidation Review – Lower Debt Faster

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Last Updated:Jul 10, 2024

Discover Debt Consolidation Review – Lower Debt Faster

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Fast Facts

Loan amount:

$2,500 to $40,000

Repayment terms:

Three to seven years

Interest:

Fixed

Prepayment penalties:

None

Late payment fee:

$39

Origination fees:

None

Debt consolidation is an attractive idea to anyone with multiple credit cards - especially if these credit cards have high-interest rates and hefty monthly minimum payment amounts. A Discover personal loan review reveals a loan option from one of the most popular finance companies in the world and may be an option for dealing with higher rates and large monthly minimums.

But before signing on the dotted line, you should understand what taking on a debt consolidation loan means, both for the amount of debt and the time it takes to pay it down. Is a Discover Debt Consolidation loan a good option for you? Take a look at the review below and see if it makes sense for your situation.

In this article

What is a Discover Debt Consolidation loan?

A debt consolidation loan is a loan you use to pay off other debts. While the total debt you owe remains the same, loan holders may benefit from consolidating multiple payments into one monthly payment. Plus, there is a potential saving if the consolidation loan has a lower rate than the debts being paid off.

Interest rates for personal loans, typically the loan category for debt consolidation, is around 12%, according to Bankrate data as of July 2024. According to the Federal Reserve, the national average for consumer credit card interest rates is about 24.62%.

Most consolidation loans are for a specified period, unlike a credit card. You will select the amount of time, usually anywhere from 12 to 84 months, within which you need to pay back the amount. The interest rate is determined by both the bank offering and your creditworthiness.

How Does the Discover Debt Consolidation Loan Work?

Visit the Discover website for a digital Discover personal loan option for an unsecured debt consolidation loan, one of many loan offers and financial services Discover Bank provides. Apply online and find out within seconds if you qualify. (You can also work with a loan specialist by calling 1-866-248-1255.) Once approved, Discover will guide you through the next steps to pay off other creditors.

During the application process, you’ll enter your personal information, including employment and address information, and then see if you qualify for the loan.

You will see a drop-down menu to choose your term length, between three to seven years, and enter the amount of debt to consolidate.

A soft credit inquiry will be made. If you pass the initial qualification and minimum credit score requirement, Discover will run a hard credit pull credit check, which minimally impacts your credit score. The interest rate and loan terms will be confirmed, and you will need to consent to take on the loan.

Discover will use a combination of your FICO score, debt-to-income (DTI) ratio, household income, employment status, and other factors to determine approval.

If you move forward, Discover will deposit the funds into your account within a few days. You can also choose to have Discover pay each creditor directly to ensure it gets completed, and you don’t have to do it alone.

Borrowers can choose to pay off auto loans, medical bills, store cards, and credit cards, but Discover requires most of the loan funds to go towards actual debt pay-off.

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How much does a Discover Debt Consolidation Loan Cost?

Discover does not charge consolidation fees, origination fees, or closing costs to take on the loan.

The loan cost will depend on the interest rate, length of time, and amount of funds you request. The interest rates vary from 7.99% to 24.99% annual percentage rate (APR), depending on your credit score, credit history, and creditworthiness.

If you decide to pay off your loan early, there is no prepayment penalty to worry about. If you are late on a payment, you will have to pay a $39 late fee.

Discover Debt Consolidation Loan features

Long repayment terms

Discover offers 36- to 84-month repayment terms, so you can create a payback schedule that works best for your finances.

Competitive interest rates

The current interest rates for consolidation loans are 7.99% to 24.99% APR, which is highly competitive compared to other consolidation options.

Wide range of funding options

You can consolidate between $2,500 and up to $40,000.

30-day money-back guarantee

If you change your mind within the first 30 days of receiving the funds, you can cancel the loan request and return the funds to Discover free of charge. Your loan will be canceled, and you will not be charged any interest.

Quick funds disbursement

If there aren’t any questions or typos in the application, you can expect the funds to be deposited the next business day.

Fixed-rate and fixed repayment plan

The APR will remain fixed throughout the loan term, and the repayment terms will remain unchanged. This means you will know your monthly payment, and the amount will not change.

Flexible payment options

You have various options for making your monthly payment, including autopay set up, through the secure website, by phone, mail a check, wire transfer with the help of a customer representative, or electronic bill pay.

Direct payoff to creditors

If you don’t want to hassle with paying off other debts, you simply provide the account information to Discover, and the debt will be directly paid on your behalf with funds from your loan. This includes student loans or credit cards.

Pros and cons

Pros

Competitive interest rates could potentially save you money.
Flexible repayment terms and payment options
Transparent application process and qualification information
Quick access to funds
Seamless online and mobile application and account management
No prepayment fees

Cons

No co-signer allowed
Late payment charges
No secured loan option

Get a Personal Loan with Quicken Loans

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If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
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Who is a Discover Consolidation Loan best for?

Anyone trying to set a debt pay-off schedule may want to consider this type of loan. If you struggle with juggling multiple creditors and payments, moving to a single amount may save money and lessen the mental burden of having various accounts.

If you have multiple accounts with higher interest rates, whether it’s a medical bill, credit card, store card, or another type of account, you may be able to save money on interest and fees, plus you will have a predictable payment each month.

This is also a great option for those who like to manage their account on the go, either online or through an app. Discover is known for providing outstanding customer service and multiple flexible payment submission options.

Discover vs. other competitors

Consolidation loan option	Term length	APR range	Loan amount	Prepayment penalties or origination fees
Discover	Three to seven years	7.99% to 24.99%	$2,500 to $40,000	None
Navy Federal Credit Union	Three to five years	8.99% to 18.00%	$250 to $50,000	None
Lending Club	Two to five years	8.98% to 35.99%	$1,000 to $40,000	Origination fee of 3% to 8%. No prepayment penalty

Navy Federal Credit Union

The Navy Federal Credit Union (NFCU) offers a debt consolidation option, but you must be a member to apply. Membership is available for active duty men and women of all branches of the military, veterans, Department of Defense employees, and their family members. The term length and loan amounts are more flexible versus Discover, but the interest rates may be higher since rates start at 8.99% compared to Discover’s potential at 7.99%. Like Discover, NFCU does not charge a prepayment penalty, origination fee, or closing costs for personal loans.

Read a full review of Navy Credit Union's debt consolidation.

LendingClub

LendingClub was initially a peer-to-peer lending option but is no longer exclusively tied to this lending model since acquiring a bank in 2020. A personal loan from LendingClub can be used to pay off debts, but you will have a high origination fee if you go with this option. LendingClub traditionally allows at least a 600 credit score for a loan application, which is lower than other lenders. The loan terms range from 24 to 60 months.

Read a full review of LendingClub.

FAQs

Does taking out a Discover debt consolidation loan affect my credit score?

Although the initial inquiry does not impact your credit score, it will have an impact if you proceed with the application process. Discover will use a hard credit pull when going through the credit check. This has minimal impact on your score and will stay on the credit report for up to two years. However, an installment loan will show up on your credit report. This will impact your overall credit usage and credit mix, which may have an even more significant impact on your score overall.

Is a Discover debt consolidation loan a good idea?

Ultimately you will need to weigh the pros and cons of using a Discover debt consolidation loan. If it helps you meet your financial goals of debt pay off sooner and by paying less interest over time, then it may be worth it to you.

Get a Personal Loan with Quicken Loans

Use Quicken Loans to Get a Personal Loan

If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
TrustPilot Rating 4.6 out of 5
Connect with lenders for $0
100% online experience.

See How Much You Can Get Through Quicken Loans

Is Discover Debt Consolidation legit?

When it comes to debt consolidation loans, Discover offers a highly competitive option. The flexible repayment terms, potentially lower interest rates, customer service, and flexible payment options make this one of the best personal loans worth considering. If debt consolidation is in your future and could help you reach your financial goals, add Discover debt consolidation to your list of options.

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Sara Coleman is a former corporate gal turned creative entrepreneur. She began writing professionally several years ago and now contributes to multiple websites, blogs, and magazines. She’s also an avid reader and can’t resist a great historical fiction novel. Sara holds a BA in journalism from the University of Georgia and can be found supporting her Bulldogs every chance she has. She resides in Charlotte, North Carolina, with her wonderfully supportive husband and three children. When she’s not ushering her kids to sports and dance lessons, she can be found creating content for her own website, TheProperPen.com.

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