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Discover Debt Consolidation Loan Review

Discover is a digital bank that offers consumers personal loans for debt consolidation. It has an A-plus rating with the Better Business Bureau and its loans come with enticingly low interest rates.

Discover launched with a single credit card product in early 1986, issued by Dean Whitter Financial Services Inc., a subsidiary of Sears, Roebuck Co. At the time, it was one of the few credit cards that didn’t charge an annual fee or charge a fee to merchants. Its low-cost profile caught on fast, and the card was accepted by more than 1 million merchants by 1989.

Credit cards are still a major part of the company’s product line, but banking services and loans have been added over the years, with the same aim of being affordable to customers.

Discover offers personal loans specifically for debt consolidation, which means the money is used to pay off other unsecured debt, like credit cards, student loans and medical bills. Even if the interest rate on a debt consolidation loan is as high as the interest on the debt that is being paid off, a fixed term to pay off the debt ends up being less expensive than making payments on cards with revolving credit.

Discover debt consolidation loans are more affordable than many other online lenders, with no origination fees and an APR between 6.99% and 24.99%. Loans are between $2,500 and $40,000, with loan terms of 36 to 84 months.


  • Type of Debt Relief – Debt consolidation loan
  • Eligibility and Requirements – Household income of at least $25,000; U.S. citizen aged 18 or older
  • Interest and Fees – 6.99-24.99% APR; no origination fee; $39 late fee
  • Credit score impact – Minimal
  • Consumer Reviews – Mixed

How Discover Debt Consolidation Loans Work

Discover’s website has an online application form for debt consolidation loans that makes the application process fairly quick and efficient.

You supply personal information including name, address, income, and employment. You also put the amount you want to borrow and how long a term you’d like. Loans are offered for terms of 36 to 84 months.

Discover does a soft credit pull, which doesn’t affect your credit score.

Discover will provide loan options that may include different lengths of loan and interest rates to choose from. Once you choose, you apply for the loan, which means a hard credit pull that will lower your credit score for a short time.

You’ll have to supply:

  • Income and employment information for verification
  • Bank account and routing numbers for direct deposit
  • Balances and accounts for creditors

A loan specialist may call you to verify your information and clarify some details.

If you accept the loan terms, you can expect money in your account as soon as the next business day, though it could take up to a week. Discover requires that 70% of the loan be used to pay creditors, and you can opt for it to be sent directly to them or sent to you to pay them.

If you have second thoughts after receiving the loan money, Discover will let you return it within 30 days after you accepted the loan without charging interest.

Discover Debt Consolidation Eligibility and Requirements

Like many online lenders, Discover claims to take a holistic approach when reviewing applicants for potential loans. This means your credit score, credit history, income, debt-to-income ratio, and employment status all play a part in the final decision.

Minimum requirements for a Discover debt consolidation loan are:

  • U.S. citizen or permanent resident
  • At least 18 years old
  • Minimum household income of at least $25,000

Discover does not list a minimum credit score among its requirements, but you will need a 660 to qualify.

Discover offers a prequalification option that allows you to find out whether you qualify (but not whether you’ll be approved), with only a soft credit pull that won’t have an impact on your credit score. Some competitors don’t offer this feature, and instead just run a hard credit check, which hurts your credit score, whether you qualify or not.

There is no guarantee, even if you qualify, you will be approved for a loan.

Fees for Discover Debt Consolidation Loans

The only fee Discover charges with its debt consolidation loan is a $39 late fee, which is higher than most online lenders. There are no origination or prepayment fees.

Interest rates range from 6.99%-24.99%. To get the lowest rate you’ll need a remarkable credit score, but the rates in general are lower than most debt consolidation loans offered online. It’s also lower than the rates for other Discover personal loans because the loan is being used to reduce debt.

Pros and Cons of Debt Consolidation with Discover

Discover’s lowest debt consolidation rate, 6.99% APR, would be hard for anyone to pass up, but it’s only available to applicants with the best credit scores. On the other hand, APR is capped at 24.99%, which is lower than many of Discover’s competitors.

Pros of Discover

  • Lower APR than competitors
  • No origination or application fees
  • Loans terms as long as seven years
  • “Buyer’s remorse” 30-day loan return option

Cons of Discover

  • $40,000 maximum loan amount
  • $39 late payment fee
  • 660 credit score needed to qualify

Is a Discover Debt Consolidation Loan Right for Me?

Discover offers some of the lowest rates you can find for debt consolidation loans, but you need a good credit score to get those rates. If your credit isn’t great, there are better alternatives.

The high late payment fee will add a hefty amount to a monthly payment, so borrowers who have trouble hitting the payment date should also look elsewhere.

Discover Reputation and Consumer Reviews

Discover has an A-plus rating with the Better Business Bureau, with few complaints regarding its debt consolidation loans. Most complaints on the BBB website concern Discover Financial Services, with major issues being the website’s lack of information about certain financial services, as well as poor communication and mismanagement of accounts that resulted in unnecessary charges and fees.

On its own website, Discover has an average 4.9 out of 5-star rating with more than 25,000 reviews. Positive reviews focused on ease of application and helpful, friendly customer service.

Alternatives to Discover Debt Consolidation Loans

If you don’t qualify for a Discover debt consolidation loan because of a low credit score, there are alternatives.

Discover balance transfer card. Discover also offers a balance transfer credit card that has a low introductory interest rate. You transfer your high-interest cards to the new card, eliminating high interest. For 15 months. Once the introductory rate period ends, the interest rates will be between 16.99-27.99%. This, and similar balance transfer cards, are a good option for someone who has enough income to quickly pay the balance of the card off before the interest rate goes up.

Avant accepts credit scores as low as 580 and, unlike Discover, does not have a minimum income requirement. Loans are for $2,000 to $35,000. You’ll likely pay much higher APR than you would if you’d qualified for Discover, with rates from 9.95%-35.99% for terms of 12 to 60 months. Fees include an “administrative fee” of up to 4.75% when the loan is approved, and a $25 late payment fee.

Rocket Loans offers debt consolidation loans ranging from $2,000 to $45,000, with 36 or 60-month terms. Rocket considers credit profile, income, and debt-to-income ratio before displaying a list of offers for an applicant to choose from. Origination fees are high, up to 9%, and APR is 9.116% to 29.99%. It doesn’t list a minimum credit score, but industry insiders say at least 640 is needed for approval. Rocket also considers income, credit history and DTI.

Upstart. Borrowers with credit scores as low as 580 can apply for an Upstart loan, but they are much less flexible than Discover. Terms are for either 36 or 60 months, with a maximum $50,000. An applicant may get offers from several different loan providers, some of which may have origination fees.

Alternatives to Debt Consolidation Loans

If you want to consolidate debt but aren’t in a position to borrow money to do it, or would just prefer not to borrow, there are other ways to consolidate your debt, particularly if you have bad credit.

Credit Counseling

Credit counseling can be found at nonprofit credit counseling agencies, housing authorities and other consumer-based nonprofits. The counselor will review your finances, help you create a budget and discuss the best options for reducing your debt. They are a fiduciary, which means they’re required by law to give you advice that’s in your best interest rather than sell you a product.

Debt Management

Debt management plans eliminate debt in 3-5 years and are offered by nonprofit credit counseling agencies. They are not loans, and it doesn’t matter what your credit score is. The counselor works with your creditors to lower your interest rate, and you make one fixed monthly payment to the agency, which pays down your credit cards and other debts. Since it’s a fixed payment, and interest rates are lower, it will cost you less a month than the payments you’re making now and will cost you a lot less in the long run. On-time payment and lower debt means your credit score will improve as your debt is paid down. An administrative fee is included in the monthly payment.

Nonprofit Debt Settlement

Nonprofit debt settlement, also known as credit card forgiveness or Less Than Full Balance, is a new program offered by some nonprofit credit counseling agencies as an alternative to traditional for-profit debt settlement. With nonprofit, there is no negotiation. You pay 50%-60% of your debt balance in equal payments over 36 months. You don’t pay any interest during the payment period. Because it’s a new program, not all card companies or credit counseling agencies offer it.

About The Author

Bents Dulcio

Bents Dulcio writes with a humble, field-level view on personal finance. He learned how to cut financial corners while acquiring a B.S. degree in Political Science at Florida State University. Bents has experience with student loans, affordable housing, budgeting to include an auto loan and other personal finance matters that greet all Millennials when they graduate. He has a prodigious appetite for reading, which he helps feed with writing from Scottish philosopher Adam Smith, the “Father of Capitalism.” Bents writing also has been published by JPMorgan Chase, TheSimpleDollar and


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