Using one form of debt to pay off another may sound counterintuitive. But, in many instances, using a personal loan to pay off credit card debt can be a smart tactic as you work to become debt free. If you feel like you’re drowning in interest charges because of a high annual percentage rate on your credit card, or you’re struggling to manage payments across multiple credit cards, a personal loan might be the tool you need to get things under control.
We’ll examine how to decide if getting a personal loan to pay off credit card debt is a smart move, how to find the right lender for your debt consolidation loan, and alternatives to consider.
How paying off credit card debt with a personal loan works
It’s possible to use a personal loan for almost anything, as long as it’s legal. You’ll apply for the personal loan by providing personal and financial information such as your name, address, Social Security number, and income. If approved, you may be able to have the funds sent directly to your credit card issuer or issuers, or you might have the funds deposited into your bank account and you’ll need to then manually trigger the credit card payments.
Note that if any payments on your credit card or cards are due before the personal loan processes, you’re still responsible for making those payments. You should get a refund if any payments you make plus the personal loan hitting the account result in an overpayment.
Once your personal loan is disbursed, you’ll be responsible for making a single monthly payment to the creditor that holds that loan. You’ll have a set repayment timeline, typically anywhere from one to five years. You can pay your loan off early to save on interest charges, though depending on your lender it’s possible that could incur a prepayment penalty.
You’ll typically have an option to either make your loan payment manually each month or set up autopay, where the payment will be deducted monthly from your checking account. Some lenders may offer a lower APR if you commit to autopay when taking out the loan.
When using a loan to pay off credit card debt makes sense
It would save you money on interest
We recommend never carrying a balance on a credit card if you can avoid it, unless you’re taking advantage of a 0% introductory APR period. Credit card interest rates tend to be more punishing than personal loan rates, and especially if you’re only making the minimum monthly payment on your card, you could pay an exorbitant amount of interest over the life of your debt. In many instances, a credit card minimum payment might cover as little as 1% of your principal, with the bulk of the payment going toward interest charges and any relevant fees.
Below you’ll find a couple estimates for how much you’d pay in interest when paying off a $5,000 balance on a credit card that has a 20% APR compared to a $5,000 personal loan with a 12% APR, if you were to zero out the debt in three years in both cases.
| Starting Balance | APR | Monthly Payment | Total Interest | |
|---|---|---|---|---|
| Credit Card | $5,000 | 20% | $189 | $1,670 |
| Personal Loan | $5,000 | 12% | $166 | $979 |
| Credit Card | |
|---|---|
| Starting Balance | $5,000 |
| APR | 20% |
| Monthly Payment | $189 |
| Total Interest | $1,670 |
| Personal Loan | |
| Starting Balance | $5,000 |
| APR | 12% |
| Monthly Payment | $166 |
| Total Interest | $979 |
We should emphasize that the consistency of a personal loan payment is a feature, as it keeps you on track to repay your debt within a specified term. With a credit card, there can be a temptation to make just the minimum payment even if you know you need to pay more to work your way out of debt more quickly.
Sticking with the hypothetical outlined above, if you dropped your monthly payment down to $125, it would take about five-and-a-half years and approximately $3,365 in interest before you zeroed out your credit card balance.
You can consolidate multiple debts
If you’re carrying balances on multiple credit cards, keeping track of the various due dates adds to your mental load. Plus, if you’re incurring interest charges on those balances, it’s probably expensive. Using a personal loan to consolidate all those debts into one monthly payment at a potentially lower interest rate is very likely a smart money move.
When using a loan to pay off credit card debt doesn’t make sense
The debt is small enough to pay off in a few months
For one thing, each personal loan you open is a hard inquiry that will ding your credit score by a small amount. And for another, many personal loan lenders start repayment terms at one year, meaning these are not the ideal tool for debts you can repay in a shorter span of time.
Consider a hypothetical where you’ve got a $600 balance on a credit card with a 20% APR. If you commit to a $200 monthly payment, you’d zero out the debt in about four months while paying approximately $21 in interest. Even if we tweak the example to consider a larger balance and a smaller payment, a $1,000 balance and a $150 monthly payment would mean eight months to pay the debt off and about $70 paid in interest.
In situations such as these, discipline and budgeting will serve you better than applying for a personal loan. To succeed in this endeavor, it’s key to be consistent with payment amounts (you might consider setting up autopay) and avoid making new purchases that increase your balance.
You’re still adding to your credit card balances
It may be an obvious statement, but the crux of getting out of debt is to find a sustainable way to budget for your situation, so that you’re not spending more than you’re bringing in. If you’re still adding to your credit card balances, a personal loan will simply enable overspending. In that case, take a look at our guide on five different budgeting strategies to find the one that works for you.
How to choose the best loan for paying off your credit card debt
Some factors to consider when evaluating personal loan lenders:
- Loan amount. Some lenders start you out with a minimum in the vicinity of $5,000. That’s no good if you only need to pay off, say, a balance of $1,000 on your credit card. You’ll want to make sure you pick a lender with minimum and maximum loan amounts that address the amount of credit card debt you’re going to use the loan to pay off.
- Term length. Longer loan terms generally mean lower monthly payments, though you’ll probably pay more in interest over the life of the loan. If you have a lot of debt to pay down, picking a longer loan term may be more feasible for your budget.
- Fees. Ideally, you’d like to get a loan without origination fees, prepayment fees, and other assorted charges.
We’ve selected a few lenders below that we think will serve borrowers with a variety of needs. You may also wish to peruse our lists of best personal loans for excellent credit and best personal loans for good credit as you decide where to apply.
| Institution | Loan amounts | Max term | APR range | [EDIT.HEADER] |
|---|---|---|---|---|
| LightStream | $5,000-$100,000 | 240 months | 6.49%-24.89% | View offer at MoneyLion |
| Wells Fargo | $3,000-$100,000 | 84 months | 6.74%-25.99% | View offer at MoneyLion |
| PenFed Credit Union | $600-$50,000 | 60 months | 6.74%-17.99% | View offer at MoneyLion |
| LightStream | View offer at MoneyLion |
|---|---|
| Loan amounts | $5,000-$100,000 |
| Max term | 240 months |
| APR range | 6.49%-24.89% |
| Wells Fargo | View offer at MoneyLion |
| Loan amounts | $3,000-$100,000 |
| Max term | 84 months |
| APR range | 6.74%-25.99% |
| PenFed Credit Union | View offer at MoneyLion |
| Loan amounts | $600-$50,000 |
| Max term | 60 months |
| APR range | 6.74%-17.99% |
Lender details checked Jan. 22, 2026.
Alternatives to using a loan to pay off credit card debt
While getting a personal loan to pay off credit card debt is oftentimes a smart move, it’s not the only option available—and it may not be the perfect fit for your situation. Here are some strategies and financial tools you may wish to consider:
- Debt avalanche or debt snowball. If you’re working to pay off multiple credit cards, one of these methods may help you prioritize your debts. The debt avalanche is where you pay off the highest-interest debts first, to reduce the overall interest you have to pay. By contrast, the debt snowball is where you pay off your debts from smallest to largest, so that you get the rewarding wins earlier on of paying off the smaller balances.
- Home equity line of credit (HELOC). If you’ve built up significant equity in your home, a HELOC can be a powerful tool for purposes such as emergency expenses and debt consolidation. The rate you’ll pay on a HELOC is likely to be lower than what you’d pay to carry a balance on a credit card. But, do approach this with caution as your home acts as collateral for a HELOC, meaning you risk foreclosure if you fail to repay it.
- Balance transfer credit card. If your credit is good to excellent, you may be able to qualify for a balance transfer credit card with an introductory 0% APR period. Many of these intro periods last a year or even close to two, and you should only owe interest on any balance that remains after the intro period ends. You’ll still be required to make at least the minimum payment each month. Note that your balance transfer card must be from a different issuer than your existing card or cards. Typically, you’ll also incur a fee ranging from 3% to 5% of the amount transferred. For those who can craft a repayment plan and stick to it, this can be a very effective way to pay off credit card debt.
- Nonprofit credit counseling. If your credit card debt is so overwhelming that none of the options we’ve covered so far seem like they’ll get you on better footing, consider working with an accredited nonprofit credit counselor on a debt management plan. Look for counselors associated with the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA) to ensure you’re connecting with someone legitimate who will handle your case according to strict ethical standards.
The takeaway
For those facing relatively small amounts of credit card debt that can be repaid in a few months with careful budgeting, taking out a personal loan may be unnecessary. But, if you’re carrying a larger amount of credit card debt and are seeking a way to reduce what you pay in interest while giving yourself a timeline to repay your debt, a personal loan might be exactly what you need.
Getting a personal loan can also be a smart move if you’re seeking to consolidate debts from multiple credit cards. Moving to one monthly loan payment could potentially save you in interest charges in addition to simplifying your life by giving you fewer payment dates to keep track of.
In either case, it will be key to stick to your budget and not add to your credit card balance again after you pay it off with a loan. That will be the difference between getting stuck in a cycle of debt or successfully using your loan to navigate your way to a better financial situation.