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After she left her corporate job to start a coaching business, Christy Whitman rang up $90,000 in credit card debt. “Paying it off seemed impossible, given that I was only making $60,000 a year as a brand-new coach,” said Whitman.

To make the task easier, she took out a loan to consolidate her debt. “The moment I consolidated all of my credit card debt into one monthly payment, I could see the light at the end of the tunnel,” she said.

Whitman paid off the full $90,000 in just over two years. Later, she became a well-known leadership coach and bestselling author of The Art of Having It All.

If you also have credit card debt you’re eager to pay down, a personal loan could help. Weigh the pros and cons below to see if a personal loan for debt consolidation is right for you.

Pros of using a personal loan to pay off debt

Getting a loan to pay off credit cards money management easier

Like Whitman, many people have used personal loans to make money management easier. One personal loan for debt consolidation lets you combine several high-interest credit card debts into one set regular monthly payment, with a fixed interest rate and repayment term.

“Having one large loan payment instead of multiple credit card payments will make your finances more manageable,” said Katie Ross, manager of education and development and housing for American Consumer Credit Counseling, a nonprofit member of the National Foundation for Credit Counseling in Newton, Massachusetts. “The fixed interest rate will also shorten the time you spend paying off debt.”

A personal loan to pay off debt can save you money

In addition, personal loan interest rates are often lower than credit card rates.

A lower interest rate means more of each payment will be going toward principal. With more going toward principal and less toward interest, you’ll be able to pay down your credit cards sooner.

In fact, 89% of surveyed debt consolidation customers told us they paid off existing debt sooner with a Discover® personal loan and the majority of them reported that they paid it off an average of 2 years earlier.*

You’ll know when you’ll be debt-free

One advantage of consolidating credit card debts into a personal loan is the defined end date for your loan. The payment may be larger than the minimum balance on credit card accounts, but if you pay it on time every month, you will be relieved to see your balance disappear. That’s something to look forward to.

“This establishes commitment and a process for getting rid of your debt,” said Scott Stratton, a certified financial planner in Dallas. “Whereas if you just send in a minimum each month, you’ll be paying for it forever.”

Minimum required monthly payments on credit cards may be as little as 1% or 2% of the balance, Stratton added. “And when you’re paying 20% interest or more on that, you’re not even treading water.”

Having one set regular monthly payment also makes it easier to budget because you know exactly how much you will pay toward your loan every month.

Cons of getting a loan to pay off debt  

It’s not a cure-all

A personal loan for debt consolidation can be useful if you have higher-interest credit card debt. But you can’t create good financial health in a vacuum.

If you have too much debt, or the wrong kind of debt, you may need to shore up your credit health before taking out another loan and adding to your debt burden. How? (1) By reducing your higher-interest debt as much as you can. And (2) planning to avoid going into debt again.

Many personal loans have fees

If you are thinking about getting a personal loan to pay off credit card debt, be sure to compare different lenders and calculate the total cost of borrowing before applying.

This step is crucial because in addition to interest, some lenders charge application fees, origination fees, prepayment penalties, late payment fees, returned payment fees, or payment protection insurance. When these fees add up, they can reduce or eliminate any potential savings.

Your credit health affects your interest rate

The average interest rate for credit cards is higher than for personal loans. But that doesn’t mean you will qualify for a loan with a better rate.

So do some research first. Make sure you know the interest rates you’re paying on your credit cards. Then see if you can find a personal loan lender offering a better one. Factors like your credit score, loan amount, and repayment term can all impact your APR.

The bottom line

Using a personal loan for debt consolidation doesn’t mean you won’t get into debt with higher-interest credit cards again. But it can be a useful part of a debt management plan—and it can help you maintain good financial health.

Try our debt consolidation calculator to see how much you might save in interest with a personal loan.Estimate Savings

Articles may contain information from third-parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.


All figures are from an online customer survey conducted August 19 to September 6, 2022. A total of 665 Discover personal loan debt consolidation customers were interviewed about their most recent Discover personal loan. All results @ a 95% confidence level. Respondents opened their personal loan between January and June 2022 for the purpose of consolidating debt. Agree includes respondents who ‘Somewhat Agree’ and ‘Strongly Agree’.