Should I Use a Personal Loan To Pay off Credit Card Debt? Bankrate
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. Main Menu Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Banking Compare Accounts Use calculators Get advice Bank reviews Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Loans Personal Loans Student Loans Auto Loans Loan calculators Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Home equity Get the best rates Lender reviews Use calculators Knowledge base Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Real estate Selling a home Buying a home Finding the right agent Additional resources Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Insurance Car insurance Homeowners insurance Other insurance Company reviews Looking for the perfect credit card? Narrow your search with CardMatch Main Menu Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Looking for the perfect credit card? Narrow your search with CardMatch Advertiser Disclosure Should I use a personal loan to pay off credit card debt
RichVintage/Getty Images Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. Written by Personal Finance Contributor Nicole Dieker has been a full-time freelance writer since 2012—and a personal finance enthusiast since 2004, when she graduated from college and, looking for financial guidance, March 29, 2022 Edited by Associate Editor Reviewed by Senior Reporter Poonkulali Thangavelu is a senior writer and columnist at CreditCards.com and Bankrate, addressing debt and credit card-related legal and regulatory issues. March 29, 2022 Share
Bankrate Logo Why you can trust Bankrate
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Bankrate Logo Why you can trust Bankrate
At Bankrate, we have a mission to demystify the credit cards industry — regardless or where you are in your journey — and make it one you can navigate with confidence. Our team is full of a diverse range of experts from credit card pros to data analysts and, most importantly, people who shop for credit cards just like you. With this combination of expertise and perspectives, we keep close tabs on the credit card industry year-round to: Meet you wherever you are in your credit card journey to guide your information search and help you understand your options. Consistently provide up-to-date, reliable market information so you\'re well-equipped to make confident decisions. Reduce industry jargon so you get the clearest form of information possible, so you can make the right decision for you. At Bankrate, we focus on the points consumers care about most: rewards, welcome offers and bonuses, APR, and overall customer experience. Any issuers discussed on our site are vetted based on the value they provide to consumers at each of these levels. At each step of the way, we fact-check ourselves to prioritize accuracy so we can continue to be here for your every next. Bankrate Logo Editorial Integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate Logo How We Make Money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Bankrate Logo Insurance Disclosure
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. If you have credit card debt, you know how frustrating it can be to try to balance multiple credit card payments every month. Will you be able to make more than the minimum payment on each card? How much more? Should you focus on paying off the card with the highest balance, or the card with the highest interest rate? Taking out a for credit card debt can help you solve many of these problems. You can use your personal loan to pay off your credit card debt in full-and since personal loans often have lower interest rates than credit cards, you might even save money in interest charges over time. That said, has its pros and cons. Let's take a look at the advantages and disadvantages and explore a few options that might help you pay off your credit card debt without taking out a personal loan. 3 reasons to use a personal loan for credit card debt
Using a personal loan for credit card debt is a form of , and there are a lot of advantages to into a single monthly payment. Here are three of the biggest reasons to use a personal loan to pay off your credit card debt: 1 You can pay off credit card debt in full
If you have high credit card balances, a personal loan can help you pay off your credit card debt in full. This will not only give you the peace of mind that comes with being out of credit card debt, it might also . Keep in mind that using a personal loan to pay off your credit card debt isn't the same thing as becoming debt-free. After you pay off your credit cards, you'll still need to pay off your personal loan. However, paying off your high credit card balances, and saying goodbye to the high interest charges that accompany them, can be a huge financial relief, and is one of the biggest benefits of paying off debt with a personal loan. 2 You ll probably get a lower interest rate
The is currently around 16 percent APR-but many of the are closer to 6 percent APR. While your actual interest rate will depend on your credit score, the amount of money you plan to borrow and the terms of your loan, there's a good possibility that a personal loan will have a much lower APR than your credit cards. If you take out a personal loan that has a lower interest rate than what you're paying on your credit cards, you could save a lot of money in interest charges by using your personal loan to pay off your credit card debt. 3 You ll have one monthly payment
Balancing multiple credit card payments every month can be difficult. Personal loans let you consolidate your debt into a single monthly payment. This can make it easier to plan ahead and set aside money for your monthly loan payment, which can also help you pay off your personal loan more quickly. Remember: The more money you put toward your loan payments every month, the more money you'll save over time in interest charges. Potential drawbacks of paying credit cards with a personal loan
While there are many benefits to using a personal loan for credit card debt, there are also a few drawbacks, including the possibility of ending up in credit card debt again. Here are four of the biggest drawbacks of paying credit cards with a personal loan: 1 Personal loans are another kind of debt
While personal loans can help you pay off your credit card debt in full, it's important to remember that a personal loan is just . Once your credit cards are paid off, you won't be debt-free-you'll still need to pay off your personal loan, and you'll need to make your monthly loan payments without getting into new credit card debt in the process. 2 It might be difficult to avoid using your credit cards
If you are in the habit of using your credit cards to cover expenses that you can't pay off in full every month, it might be difficult to learn how to spend within your means. When you use a personal loan to pay off credit card debt, it's important to avoid racking up new credit card balances as you pay off your personal loan. Otherwise, you could end up worse off than you started. If you can handle making small purchases on your credit cards and paying them off in full every month, you might be able to continue using your credit cards after you've paid them off with your personal loan. If not, it might be a good idea to avoid using your credit cards altogether. Once your personal loan is paid off, you can start using credit cards again-but only for purchases you can pay off in full at the end of each billing cycle. 3 Low interest rates are not guaranteed
We've talked a lot about how personal loans tend to offer lower interest rates than credit cards, and while this is true, it may not be the case for everyone. If you have a and you happen to have bad credit, you might not qualify for a personal loan. And if you do manage to get approved for a , you may be hit with a higher interest rate than you'd like. 4 Personal loans come with fees
Some personal loans charge an , among many others including late payment fees and insufficient funds fees. Keep this in mind as you are browsing your options and make sure you are aware of any fees that may come with a personal loan before committing. How to pay credit card debt with a personal loan
If you want to use a personal loan for credit card debt, here are the steps you need to take: Apply for a personal loan
Compare personal loan services, look into eligibility requirements and apply for the loan that seems like the best option for someone with your debt and credit score. Use the loan money to pay off your credit card debt
In many cases, the money you receive by taking out a personal loan is deposited directly into your checking account. Use that money to pay off your credit card debt-don't use it for anything else. If you misuse your personal loan funds, you'll remain in credit card debt and you'll have your personal loan to pay off. Pay off your personal loan as quickly as possible
Once your credit card debt is paid off in full, focus on paying off your personal loan as quickly as possible. Make sure your loan doesn't penalize you for early repayment and put as much extra money toward your loan every month as you can afford. Avoid using your credit cards as you pay off your personal loan
Don't let yourself get back into credit card debt as you pay off your personal loan. Avoid using your credit cards, or only make purchases that you know you can pay off in full every month. Start using your credit cards for purchases you can afford
There's no reason to give up using credit cards forever-there are so many , including the ability to . That said, try to use your credit cards only for purchases you can afford. Credit card debt is expensive, time-consuming and much more trouble than it's worth. That's why many people use personal loans to pay off their credit card debt and give themselves a fresh start. Alternatives to manage credit card debt
Apply for a balance transfer credit card
A can help you consolidate your credit card balances onto a single card, which often makes it easier to pay off your credit card debt. Many of the give you between 12 and 21 months of to help you pay down your balances while avoiding interest charges. Negotiate a lower interest rate
If you think would give you the edge you need to pay off your credit card debt quickly, try contacting your lenders and asking for a rate reduction. Keep in mind that cardholders in good standing will be more likely to receive a lower interest rate than cardholders who have a history of . Ask about hardship programs
Credit card issuers have hardship programs designed to help people who find themselves unemployed or experiencing another kind of unexpected financial strain. Many of these programs include , in which card issuers waive payments (and, occasionally, interest) for a set period of time. If you are in the middle of a financial crisis, calling your credit card issuer and asking about hardship programs can help you avoid getting into unmanageable credit card debt. Look into credit counseling
A reputable can help you manage your credit card debt and suggest options that might help you pay down your debt more quickly. Whether you're hoping to create a budget or compare debt consolidation options, a credit counseling service can provide the guidance you need. Sign up with a debt settlement service
If you don't think you'll ever be able to pay off your credit card debt in full, a can help you negotiate a settlement with your credit card company. Debt settlement companies often come with hefty fees, and settling your debt instead of paying it off in full could damage your credit score. However, debt settlement is one way of dealing with the kind of credit card debt that you can no longer manage on your own-so add it to your list of options. The bottom line
Taking out a personal loan for credit card debt can help you pay off your credit card debt in full and get control of your finances. However, a personal loan isn't the only option for people who want to pay off their credit card debt. A balance transfer credit card, for example, is another good way of consolidating your credit card balances into a single monthly payment. Before you take out a loan, consider all of your options. Make sure the personal loan you are considering offers lower interest rates than your credit cards, and have a plan to pay off your personal loan without going into new credit card debt. That's the best way to use a personal loan to pay off outstanding credit card balances. Changing Rates Icon showing rates changing over time. Find a personal loan that's right for you. Written by Nicole Dieker Personal Finance Contributor Nicole Dieker has been a full-time freelance writer since 2012—and a personal finance enthusiast since 2004, when she graduated from college and, looking for financial guidance, found a battered copy of Your Money or Your Life at the public library. In addition to writing for Bankrate, her work has appeared on CreditCards.com, Vox, Lifehacker, Popular Science, The Penny Hoarder, The Simple Dollar and NBC News. Dieker spent five years as writer and editor for The Billfold, a personal finance blog where people had honest conversations about money. Dieker also teaches writing, freelancing and publishing classes and works one-on-one with authors as a developmental editor and copyeditor. Edited by Associate Editor Reviewed by Senior Reporter You may also like