Consumers are increasingly turning to personal loans to manage credit card debt, driven by high interest rates. The average credit card APR stands at 19.64% as of January 2026, while personal loans average 12.19%.
Qualifying for competitive personal loan rates typically requires a FICO score of 670 or higher, with the best terms for scores of 800 or above. This interest rate difference can lead to substantial savings.
Debt consolidation through a personal loan replaces multiple credit card payments with a single monthly payment. For example, someone with $5,000 at 17% APR and $7,000 at 21% APR could secure a $12,000 loan at 10% APR, making their $200 monthly payment more effective.
Personal loans provide fixed repayment schedules, giving borrowers a clear debt-free date. This contrasts with credit cards, where ongoing use can prevent debt payoff.
However, personal loans aren't suitable for everyone. Those with small, manageable debts may benefit more from 0% APR balance-transfer cards, though these often carry transfer fees of 3% to 5%.
If spending habits remain unchanged, debt consolidation may not prevent further debt accumulation. Financial coaching or budgeting methods might be necessary first.
For those overwhelmed by debt, alternatives include debt management plans, debt settlement, or non-profit credit counseling. The Federal Trade Commission advises checking agencies with state Attorney General offices.
Other debt management options include balance transfers, debt management plans, and debt settlement. Stopping credit card use during repayment is crucial regardless of the method chosen.