Is it worth consolidating credit card debt with a personal loan?
TL;DR: Consolidation usually helps when the personal loan's rate is meaningfully lower than your blended credit card rate AND you don't stretch the tenure so long that you pay more total interest despite the lower rate. Both conditions matter — checking only the rate is how people end up "consolidating" into a worse deal.
Why the rate alone doesn't tell you enough
Credit cards charge some of the highest rates of any common debt, so almost any personal loan looks cheaper by comparison. The part people skip is tenure: stretching a 2-year credit card payoff into a 5-year personal loan can mean paying more total interest even at a lower rate, simply because interest accrues for longer.
What actually determines whether it's worth it
- The new loan's total interest cost vs. continuing to pay down each card on its own terms
- Whether the monthly payment actually drops by a meaningful amount, or just slightly
- Any fees on the new loan (processing fee, prepayment penalty on the old debt)
- Whether you'll actually stop using the cards you just paid off — consolidating without changing the habit often leads to double debt
Run the actual comparison, not a guess
Our Should I Consolidate My Loans? report runs both scenarios side by side on your real balances and rates — total interest keeping loans separate vs. one consolidated loan — with a direct verdict rather than a rule of thumb.
Frequently asked questions
Does consolidating hurt my credit score?
It can cause a small, temporary dip from the credit inquiry and a new account, but responsibly paying down one consolidated loan (rather than juggling several cards) often helps your score over time by lowering credit utilization.
What if I can't qualify for a personal loan at a good rate?
If your credit profile only qualifies you for a rate close to your cards' rates, consolidation likely isn't worth the fees and hassle — a debt avalanche or snowball strategy across your existing cards may serve you better.