Personal Loan vs Credit Card Debt

Cost comparison

Carrying $10,000 in revolving debt:

• Credit card at 24% APR, $300/month payments: takes ~5.6 years, total interest ~$10,300.
• Personal loan at 12% APR, 3-year term: $332/month, total interest ~$1,960.
• Personal loan at 12% APR, 5-year term: $222/month, total interest ~$3,350.

The shorter the personal loan, the more you save. The 5-year option is easier on monthly cash flow but costs nearly $1,400 more.

Pros of switching to a personal loan

• Fixed rate and fixed term — no surprises.
• Lower interest on most credit profiles.
• Forces a payoff date — you can't just keep paying minimums forever.
• Single monthly payment instead of juggling multiple cards.
• Improves credit utilization (credit cards drop to $0, score often rises).

Cons and traps

• Origination fees (1–8% upfront) on some lenders.
• If you keep using the credit card, you end up with double the debt.
• Lower credit scores still get high rates (15–25%) — sometimes barely better than a credit card.
• Missing personal loan payments hurts credit faster than late credit card minimums.

When NOT to consolidate

• Your credit card APR is below ~15% (rare but possible) — savings may not justify the effort.
• Your behavior is the real problem — consolidating without changing spending leads to more debt.
• Your credit is too low to qualify for a meaningfully lower rate.
• You're close to paying it off anyway (under 12 months).

Use the calculator

Frequently Asked Questions