Should You Pay Off Credit Card Debt with a Personal Loan?

Let's discuss credit card debt, a topic that has likely come up on your mind more than once. You have experienced it, if you are like most people. After a few swipes here and a few splurges there, your balance suddenly swells up like a hot air balloon with no intention of landing.

Then one day, a little voice whispers:

“Maybe I should just take out a personal loan and wipe all this out.”

And hey—that voice isn’t wrong. It’s a legit option. But is it the right one for you?

Let’s sit down, grab some virtual coffee, and unpack the good, the not-so-good, and the “read the fine print” stuff about using a personal loan to pay off your credit card debt.

First Things First: What Even Is a Personal Loan?

Picture this: you apply for a loan, get approved, and boom—they hand you a lump sum of cash. You don’t need collateral. You don’t need to justify your spending. And unlike your credit card, which lets you borrow and pay forever, a personal loan has a fixed payment plan—usually between two to seven years.

You get the money, pay off your credit cards, and then pay the loan back in bite-sized monthly chunks.

Sounds simple, right? That’s the appeal.

So, Why Do People Use Personal Loans to Pay Off Credit Cards?

The #1 reason? Interest.

Credit cards are notorious for sky-high interest rates—think 20%, 25%, sometimes even more. That means every month you carry a balance, the debt keeps growing. A personal loan, though? It usually comes with a much lower rate, especially if you’ve got decent credit.

Let’s say your credit card debt is costing you $300/month in interest alone. If you qualify for a personal loan at, say, 10%, that same debt could cost half as much in interest. That’s real money saved.

But it’s not just about the numbers. Personal loans give you structure. Instead of spinning in circles with minimum payments, you’ve got a clear finish line. You know the exact month you’ll be done, and that mental clarity is a game-changer.

And if you’re juggling five different credit cards right now, combining everything into one single payment? That alone feels like spring-cleaning your finances.

Okay, But There’s Gotta Be a Catch, Right?

You bet.

Here’s the truth: while personal loans can absolutely help, they’re not a magic eraser. If your credit score isn’t great, you might not qualify for those sweet low-interest loans in the first place. And even if you do qualify, some lenders tack on origination fees (usually 1%–8% of the loan amount). That money comes straight out of your loan—so if you borrow $10,000, you might only get $9,200 in hand. Yikes.

And here’s the kicker: if you pay off all your credit cards but then keep using them like nothing changed, you’re not solving the problem—you’re just redecorating your debt. The last thing you want is to owe money on both the personal loan and your newly recharged cards.

So ask yourself honestly: am I ready to hit reset and not go back to old habits?

Is This the Right Move for You?

Let’s play a quick game of “Yes or No.” If you’re saying yes to most of these, a personal loan might be a smart move:

• You’ve got good-to-great credit (think 670+).
• You’re juggling multiple high-interest cards.
• You’re tired of playing financial whack-a-mole.
• You want one monthly payment and a clear debt-free date.
• You’re committed to not using your credit cards after paying them off.

Still nodding? Then yeah, a personal loan might be your ticket to peace of mind.

But if you’re saying no to things like financial discipline or solid credit, then hold up. Jumping into a loan without a game plan is like putting a Band-Aid on a broken leg. It won’t fix the real issue—and it could even make things worse.

Pro Tip: Don’t Close Those Credit Cards (Yet)

You might be thinking, “Once I pay them off, I’ll close every single one!” Totally understandable, but here’s why that could backfire.

Your credit score is partially based on something called credit utilization—how much credit you’re using compared to how much you have. If you close those accounts, you shrink your available credit, which can spike your utilization ratio and lower your score. Instead, consider keeping the accounts open, using them for small, manageable purchases, and paying them off monthly. That shows healthy credit behavior and keeps your score climbing.

Not Feeling the Personal Loan Path? You’ve Got Options.

If the whole personal loan thing doesn’t feel quite right, don’t worry—there’s more than one way to slay the debt dragon.

One popular route is a balance transfer credit card. These often come with 0% interest for 12 to 18 months, which gives you breathing room to knock out your balance without that interest cloud hanging over your head. Just be careful—there’s usually a fee to transfer, and when that promo period ends, the rates shoot back up.

Another option? Debt management plans through nonprofit credit counseling agencies. These folks negotiate lower interest rates with your creditors and roll everything into one monthly payment. No loans involved, and no new debt created.

And of course, if you’re more of a DIY warrior, there’s always the snowball or avalanche method. With snowball, you pay off the smallest debts first to build momentum. With avalanche, you target the highest-interest ones first to save money. Either way, it’s all about consistency and commitment.

Final Thoughts: It’s Not About the Loan—It’s About the Plan

Here’s the truth: a personal loan isn’t a hero, and credit cards aren’t the villain. They’re just tools. What matters is how you use them.

If you’re serious about changing your financial story, a personal loan can help you rewrite that next chapter. It can give you structure, clarity, and a fresh start. But only—and this is key—only if you’re ready to change the habits that got you here.

Think of it like a financial reset button. It won’t erase the past, but it can give you a cleaner path forward.

Are you still not sure if you should get a personal loan? CredBuddha's individualised, transparent advice simplifies the decision-making process. It assists you in evaluating loan offers, determining how they impact your credit score and budget, and avoiding high-interest or hidden expenses. 

You also receive guidance on how to track your progress and develop healthier financial habits. CredBuddha provides you with the information and resources you need to make the best choice for your future, whether you're prepared to apply or are just considering your options.

...