Can You Use a Personal Loan To Pay Off Credit Card Debt?

It’s possible to use a personal loan to pay off credit card debt. In fact, it's known as debt consolidation. Paying off one form of debt with another may seem unusual, but it can make sense if the loan offers a lower interest rate or a more manageable repayment structure.

This guide breaks down how using a personal loan to pay off credit card debt works, long with the potential benefits and drawbacks to consider.

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $100,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

How Does Using a Personal Loan To Pay Off Credit Card Debt Work?

Using a personal loan to pay off credit card debt typically means replacing several credit card balances with a single new loan, a process known as debt consolidation. Instead of juggling multiple payments and interest rates, which are generally higher with credit cards, you make a single fixed monthly payment on the personal loan.

1. Determine How Much You Need To Borrow

Before applying for a loan, determine how much money you need to borrow. How much you can borrow depends on the lender, your credit score, income and debt. Most lenders offer between $1,000 and $50,000, but some may offer more.

Some lenders charge an origination fee, which is taken from your loan disbursement. If this is the case, you may need to borrow a higher amount to cover the fee.

It’s also important to make sure that you don’t borrow more than you need. Your interest rate and repayment term affect the total cost of the loan, so taking out a larger amount than necessary could mean paying more in interest over time. Aim to borrow just enough to cover your credit card balances and fees.

2. Apply for a Personal Loan

You can apply for a personal loan with a reputable lender online or through a bank or credit union. But first, you have to qualify. Requirements vary by lender but typically include your credit score, income, payment history and debt-to-income ratio (DTI).

Here’s how to apply.

1. Review your credit report. Check the lender’s requirements and look over your credit report to see if you qualify for a personal loan. You can get your credit report from each of the three major credit bureaus.

2. Compare multiple lenders. Reach out to several lenders to find a personal loan with the best interest rates, fees and repayment terms. You can find this out by doing a loan prequalification, a process that uses a soft credit pull that won’t harm your credit score.

3. Choose a loan. Review your loan offers and choose the best one for you.

4. Fill out the application. Fill out the loan application and provide personal and financial information to prove your identity, address and income. Once approved, you can review the offer and the loan’s terms and conditions before signing the loan agreement.

3. Receive the Loan Funds

How long it takes to receive personal loan funds depends on the lender. In most cases, it can take between one and five days for electronic payments, but some may deposit funds on the same day as approval.

4. Pay Off Your Credit Card Balances

Once your loan process is in your bank account, you can then pay off your credit card balances. This consolidates your debt into a single loan balance.

5. Repay the Personal Loan Over Time

Personal loans have a fixed repayment period, typically two to seven years. A longer repayment term often allows you to make smaller monthly payments, but you’ll pay more in interest over the life of the loan. A shorter term may have a higher payment amount, but costs less in interest.

Pros and Cons of Using Personal Loans To Pay Off Credit Card Debt

Let’s explore the advantages and disadvantages of using personal loans to pay off credit card debt.

Pros of Using Personal Loans To Pay Off Credit Card Debt

• Save money on interest: The average credit card APR was about 20.97%, while the average rate on a 24-month personal loan from commercial banks was around 11.65% as of late 2025. If you have a high FICO credit score, you may qualify for a lower interest rate on a personal loan and reduce the amount you pay in interest compared to carrying a balance on a high-interest credit card.

• Consolidate multiple balances: If you have balances on several credit cards, a personal loan allows you to pay them off and make a single monthly payment. 

• Lower monthly payment: A personal loan with a lower APR could result in a lower monthly payment than making minimum payments on multiple high-interest credit card balances.

• Predictable repayment schedule: Personal loans typically have a fixed interest rate and set repayment terms, so you know exactly when the debt will be paid off.

Cons of Using Personal Loans To Pay Off Credit Card Debt

• Origination fees and other costs: Some loans come with origination fees, prepayment fees and other charges. 

• May not qualify for a lower interest rate: If you have a lower credit score, you may not qualify for a lower interest rate compared to your credit card rates. In this case, you may pay the same or sometimes more in interest.

• Risk of accumulating more credit card debt: Paying off credit card debt with a personal loan doesn’t close your credit card accounts. If they remain open and spending continues, you could end up paying the loan and new credit card balances.

• Longer repayment period: If you extend your repayment timeline, it could lower your monthly payment but increase the total amount of interest you pay.

How To Know If Using a Personal Loan To Pay Off Credit Card Debt Is Right For You

Using a personal loan to pay off credit card debt can potentially save you money while giving you a debt repayment timeline. By consolidating multiple balances into a single loan, you could also simplify your finances and make it easier to stay on track with your monthly payments.

But this approach works best if you qualify for a lower interest rate and avoid adding new credit card balances once the debt is paid off. If the loan terms lower your total interest costs and help you manage your payments, then taking out a personal loan to pay off credit card debt may be a good option.

Before applying for a loan, compare offers from multiple lenders, including interest rates, repayment terms and fees, and make sure the monthly payment fits within your budget.

FAQs

How much would a $5000 personal loan cost per month?

A much a $5,000 personal loan costs per month depends on the interest rate and loan term. For example, an interest rate of 18% and a loan term of five years would have a monthly payment of $126.97. However, an interest rate of 11% over a loan term of two years would cost $233.04 per month. 

Is it smart to get a personal loan to pay off credit card debt?

It can be smart to get a personal loan to pay off credit card debt, but only if the loan offers a lower interest rate than your credit cards. A lower APR can reduce the amount of interest you pay over time. If the loan’s rate and fees are lower than the cost of carrying a credit card balance, it could help save you money. 

How to get rid of $30,000 credit card debt?

To get rid of $30,000 credit card debt, you’ll need to focus on paying down the balance and reducing the interest you’re charged. Consider making more than the minimum payment, which mostly goes toward interest, consolidating debt with a lower interest rate or negotiating a lower interest rate with your credit card companies.

Sources

• Federal Reserve Bank of St. Louis - Commercial Bank Interest Rate on Credit Card Plans

• Federal Reserve Bank of St. Louis - Finance Rate on Personal Loans at Commercial Banks, 24 Month Loan

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