Sometimes borrowing money is the only way to dig your way out.
In a perfect world, no one would need to take out a loan to consolidate and pay off debt. In the real world, however, sometimes borrowing money is the only way to dig your way out.
This is mostly due to high interest rates on credit cards. With the average credit card APR (annual percentage rate) at 20.01 percent as of October 2025, consumers are stuck paying significant sums of money in interest. Because of this, a small amount of their minimum payment actually goes towards paying down a credit card balance.
These challenges are why many people consider consolidating their credit card debt with a personal loan.When to use a personal loan for credit card debt
Debt consolidation works by taking out a single loan to pay off multiple other debts. True, consolidating debt with a personal loan means trading one kind of debt for another. However, this strategy has advantages — if you can qualify for a personal loan with affordable interest rates and fair terms.You can qualify for a lower interest rate
Qualifying for the best personal loan interest rates and terms typically requires a FICO score of 800 or higher. But you may get competitive (that is, close to average) rates with a score of 670 or higher.
Either way, personal loans come with average APRs of 12.25 percent as of October 2025. That’s considerably lower than the current average credit card APR of 20.01 percent, meaning your interest savings can be substantial.You can consolidate your debts into one payment
If you’re juggling several credit cards with their own payments and APRs, it can be difficult to organize a debt repayment plan. You have to make sure you’re making and maximizing your payments each month. Using a personal loan to pay off debt helps you get rid of multiple payments and go down to one payment per month — and hopefully with a much lower APR.
Consider using a debt repayment calculator to determine how much sooner you could pay off your debt with a lower interest rate.
Think about this simple example. Imagine you have $5,000 in debt on a credit card with a 17 percent APR and $7,000 in debt on a second credit card with a 21 percent APR. You are only able to put $100 towards each credit card per month with a total of $200 each month.
At that rate, you are not even paying off all of your interest, so you will never pay off the debts. If you can secure a personal loan for your total of $12,000 in credit card debt with an APR of 10 percent, you will be able to contribute your $200 each month and start paying off more than your interest each month.
