Personal Loan vs Credit Card Debt
Credit cards are one of the most expensive forms of debt — typically 20–25% APR. A personal loan can refinance that debt at a much lower rate, often 9–15%. But there are tradeoffs and traps to know about. For the full payoff playbook — including snowball vs avalanche and balance transfers — start with our [how to pay off credit card debt faster cornerstone guide](/how-to-pay-off-credit-card-debt-faster), then test scenarios in the [credit card payoff calculator](/credit-card-payoff-calculator).
Quick answer
If your credit card APR is above ~15% and you have decent credit, a personal loan usually saves money. But it only works if you stop using the credit card afterward.
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. Plug your real balances into the loan calculator to compare specific personal-loan offers.
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
Related Calculators & Guides
Hand-picked next steps that build on what you just learned.
- Credit Card Payoff CalculatorSee how long a balance takes to clear and how much faster extra payments get you to zero.Explore
- Debt Avalanche CalculatorAttack your highest-APR debt first to minimise the total interest you pay overall.Explore
- Debt Snowball CalculatorOrder your debts smallest-balance-first to build momentum with quick, visible payoff wins.Explore
- How to Pay Off Credit Card Debt FasterCornerstone playbook covering snowball, avalanche, balance transfers and minimum-payment traps.Explore
- Avalanche vs SnowballCompare the cheapest payoff order against the most motivating one and pick what you'll finish.Explore
- Loan CalculatorWork out the monthly payment and lifetime interest on any installment loan in a few seconds.Explore
Frequently Asked Questions
What's the typical personal loan rate?
9–25% depending on credit. Excellent credit (740+) often gets 8–12%. Fair credit (640–699) typically 15–20%.
Will a personal loan hurt my credit?
Short-term: small dip from the hard inquiry. Medium-term: usually helps because credit utilization drops. Long-term: depends on whether you stay out of credit card debt.
Should I close my credit cards after consolidating?
Generally no — closing reduces your available credit and can hurt your score. Just don't use them. Some people freeze them or remove them from digital wallets.
What about balance transfer cards?
0% intro APR balance transfers can be great IF you can pay off the entire balance during the promo period (usually 12–21 months). After that, the rate jumps. Personal loans are better when payoff will take longer.