How Personal Loans Can Help You Tackle Your Credit Card Debt

by Christy Bieber | Published on Nov. 14, 2021

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You'd be surprised how beneficial a personal loan can be.

Key points

  • Personal loans can make credit card payoff easier.
  • You may be able to reduce your interest rate using a personal loan.
  • Personal loans, unlike credit cards, come with set payoff timelines.

Personal loans can be obtained from many different banks, online lenders, and credit unions. The money you borrow when you take out a personal loan can be used for a wide variety of purposes. But one of the best things you can do with a personal loan is use it to take control of your credit card debt.

Here's why.

A personal loan helps with credit card debt in multiple ways

A personal loan can be an invaluable tool in dealing with credit card debt for several different reasons.

If you can qualify for a personal loan, you can use the proceeds from it to pay off (or pay down) one or more of your existing credit cards. Doing this comes with several big advantages:

  • You can consolidate your credit card debt. It's a lot easier to manage repaying one personal loan rather than juggling payments on multiple credit cards. By refinancing, you can avoid the question of which cards to pay off first, and you will have just one monthly payment to make instead of many.
  • You should be able to lower your interest rate. Credit card debt often charges a very high interest rate. Personal loans for qualified borrowers can come at a much lower rate. If you can reduce the cost of borrowing by lowering your interest rate, it can become much easier to pay off your loans.
  • You may be able to lower your monthly payments. Depending on the interest rate and repayment timeline for your personal loan, the new monthly payment on your loan could be lower than the payments you were previously making on your cards. This can free up wiggle room in your budget.
  • You can get a predictable payoff time and amount. Personal loans come with set repayment schedules. Unlike when you have a credit card, you'll know exactly when your balance on your loan will be fully paid off. If your personal loan has a fixed rate, rather than a variable rate, you'll also know the total repayment costs you'll incur as you work on becoming debt-free.

But a personal loan can provide these advantages for you only if you can qualify for a loan at an affordable rate and borrow enough to repay most or all of your credit card debt. The good news is, you can easily shop around with different personal loan lenders to find the loan that's right for you.

Also, you'll want to make sure that you can afford the monthly payments on your loan so you don't risk late payments. And, once you pay off your credit card debts with the personal loan, commit to not carrying a balance on them again. Otherwise, you could end up with a whole lot more debt, between paying back the personal loan and being back in credit card debt.

Organize a payoff plan by having a budget, so you won't be tempted to charge a lot and can qualify for a personal loan at a good rate. You may want to seriously consider exploring the possibility of a personal loan that helps you deal with your credit card debt for good.

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