Should You Use Personal Loans To Pay Off Credit Card Debt?

What’s the best way to eliminate credit card debt?

I recently used Lending Club to secure a small personal loan to pay off some debt. I purposely made this decision because the interest rate I received (10.99%) was significantly less than the interest rate of my original debt (24.74%).

Although the decision was intentional, I admit I could have done more research upfront to compare rates, review lenders, and confirm there was no other, more viable, option.

No regrets

Should you get a personal loan to consolidate credit card debt?

It depends.

Is there any other viable option that doesn’t involve taking on more debt?

Is your credit score high enough for you to secure a personal loan?

Will the loan help you eliminate debt for good, or will you end up with more credit card debt + personal loan debt? (Have you resolved the cash flow or potential spending problem?)

Getting a personal loan will lower your credit score. Will this pose any additional inconvenience or create any trickle-down effects?

If any of these points pose an issue, don’t do it!

If, upon further investigation, a personal loan is your best bet, do your due diligence to ensure you know what you’re signing up for.


I think paying down debt is about three things:

(1) having the resources to do it,

(2) having the willpower to apply those resources for that specific purpose consistently (without accruing more debt),

and (3) having the decision-making ability to use your money how you see fit (or having the agency; in cases where someone might have the ability to make these decisions for you or instead of you).
It’s about having the means and the will.

If you secure a personal loan to pay down higher interest debt, you can pay your debt down faster.

If you’re approved for an unsecured personal loan in the full amount of your debt, you can even pay off your entire credit card balance at once. Then you can divert your attention to paying off the personal loan at a much lower interest rate.

Paying it off faster means you pay less in interest—which means you can save a significant amount of money over time.

If your money needs are time-sensitive, you can receive funds from personal loans within 3-7 business days of your initial inquiry.

Less debt means more disposable income that you can then use for additional savings, investing, or charitable contributions. It’s a win-win.
Take a look at my Bank of America statement.

I currently owe a minimum payment of $115 each month. If I make only the minimum payment, it will take me 18 years to pay off the initial debt of $3,844.60.

In 18 years, I would have paid an estimated total of $10,631!

If I pay $152 instead of $115, only $37 extra each month, it will take me 3 years to pay off the initial debt of $3,844.60 (Three years instead of 18!).
After 3 years, I would have paid an estimated total of $5,472 (a savings of $5,159).

What in the…

bank of america


Paying off debt is as much psychological as it is physical.

If you get a personal loan, will you constantly lose sleep thinking about your payments each month?

Or will you have peace of mind knowing that you’re saving so much money in interest over the long run?

A personal loan may not be the best option for you. Here’s why:

  1. If your credit score is too low, you may not be approved for a personal loan anyway. 

    Credit scores can range from 300 to 850.Typically lenders are looking for borrowers with a credit score of 600 or higher. The higher your credit score, the lower your interest rate on this newly approved loan will be.

  1. Regardless of how good your credit is, you’ll still have to pay interest on the new loan. Interest you pay is money wasted. 

  1. If you run into any cash flow issues and decide to continue using your credit card, you’ll now owe a fixed, monthly payment AND a credit card payment. 

    Additionally, your personal loan payment may be higher than your original monthly credit card bill (since the original point was to eliminate debt by paying more).

  1. If you have credit card debt with a balance over $10,000, you may not be approved for an unsecured personal loan in the amount you need. 

  1. Getting a personal loan will LOWER your credit score. Are you willing to take the hit? 

    When I applied for my loan last month, I had a credit score of 761. Now that it’s posted to my account, it’s dropped 24 points. Um, what?! I hope this is a mistake that will sort itself out quickly. 24 frickin’ points!


ZERO PERCENT INTEREST CREDIT CARDS: If you’re consolidating credit card debt, consider transferring to a new card that offers a 0% APR for a limited introductory period.

This will give you more time to pay off your debt without incurring interest.
(Note that this isn’t an option for every lender and additional fees may apply).

HOME EQUITY LINES OF CREDIT (HELOCs): If you’re a homeowner, can you borrow against the equity in your home?

Can you sell anything of value?
Get a part-time job?
Borrow from a trusted family member or friend?
Call your creditors for help?

Are there any financial hardship programs you can apply for that reduce interest rates and fees?

Should you use personal loans to pay down debt?

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