When to Use a Personal Loan to pay Off Credit Card Debt

Having multiple credit card payments can be overwhelming due to their high-interest rates and the need to make regular, often large payments. This can leave you feeling drained and stressed. 

Additionally, multiple cards can negatively impact your credit score if you struggle to make payments on time. Fortunately, there is a solution that can help you break free from the cycle of high-interest credit card debt: a low-interest personal loan. 

What is a Personal Loan?

A personal loan is a secured or unsecured loan used mainly to consolidate debts such as multiple credit card debts and emergency expenses like wedding costs, hospital bills, funeral expenses, and divorce costs. 

The acquisition and interest rate charged on the loan is dependent on your credit score. Normally, the higher the credit score the higher the chance of getting a relatively low-interest loan. 

In comparison to other types of loans, such as mortgages, personal loans often have higher interest rates. However, they come at lower interest rates than credit card debt. 

Therefore, it is often wise to consider taking out a personal loan to pay off your credit card debt. Below are the key reasons why the move can improve your financial standing.

  • To Reduce Your Payments To One Monthly Payment

Managing multiple credit card debts can be a challenge, and it’s easy to miss a payment. To avoid this, consolidating your credit card debt with a personal loan is a good solution. 

With a fixed interest rate and one monthly payment, it becomes easier to keep track of the payments and plan for them. Fortunately, the payments are directly deducted from your bank account, which reduces the risk of missed payments. 

Additionally, consolidating your debt into a personal loan can help you pay off your debt faster. 

For example, if your total credit card debt is projected to take 5 years to pay off, a personal loan to cover the entire debt can take fewer years to settle since the interest on the new loan is bound to be much lower.

  • To Reduce Your Interest Rate

Credit card interest rates are often high, with an average APR of around 12% to 24%, while personal loan interest rates can range from 3% to 30%, depending on factors such as your credit score, the amount you want to borrow, and the terms of the loan.

So, by consolidating your card debt with a personal loan at a lower interest rate, you stand a chance of potentially saving a significant amount of money on interest charges and paying off your debt faster. 

However, it’s wise to do your research and compare offers from different lenders to find the best personal loan rates and terms that suit your financial needs.

  • To Pay Off Your Credit In Full

If you have multiple credit card debts, it can be challenging to keep track of all the payments. To simplify your debt repayment and potentially save money on interest charges, taking a personal loan to pay off your credit card debt in full can be a very beneficial financial move. 

By consolidating your debt with a personal loan, it comes with the perks of reduced interest rates and multiple payment terms; which means saving money in the long run. 

Keep in mind that it doesn’t mean you are debt free. Nonetheless, the loan terms are typically more manageable and put a stop to the endless cycle of high-interest card payments. 


To achieve financial stability and peace of mind, consolidating your credit card debt with a personal loan is a smart move. However, it’s important to do due diligence when shopping for the best loan terms that suit your finances. 

When looking for a personal loan consider the interest rates, payment amounts, and loan terms. Also, always work towards maintaining a high credit score to qualify for the best credit offers. 

By taking the above steps, you can enjoy the benefits of reduced interest rates and manageable payments, while avoiding the stress and burden of high-interest and long-term credit card debt.