Loans · Worked example
Is it worth getting a personal loan to pay off credit card debt?
Short answer
On $10,000 it often is: at 12.55% instead of 22.36%, the same $300 a month finishes in 3 years and 6 months instead of 4 years and 5 months, with $3,411 less interest.
A 3-year loan would be about $335 a month and about $2,050 in interest, before any origination fee.
The average credit card APR on balances that charge interest was 22.36% in August 2026 (Federal Reserve). Personal loans averaged about 12.55% for good credit (Bankrate, October 2026). That gap is the whole case for consolidating.
Bars drawn to scale. Assumes no new charges and a fixed 22.36% APR, with the first payment next month.
| Monthly payment | Debt-free | Payments | Total interest | Saved vs $300 |
|---|---|---|---|---|
| $400 | Aug 2029 | 34 | $3,586 | $2,185 |
| $300 | Mar 2031 | 53 | $5,771 | — |
The same balance at 12.55%
| Option | Monthly payment | Debt-free | Total interest |
|---|---|---|---|
| Keep it at 22.36% | $300 | Mar 2031 | $5,771 |
| Personal loan, 36-month term | $335 | Oct 2029 | $2,050 |
| Personal loan, paying $300 | $300 | Apr 2030 | $2,360 |
Before fees. Many personal loans charge an origination fee of a few percent, taken from the loan amount.
Try your own numbers
When it works
You qualify for a real rate cut. The numbers above assume 12.55%. With fair or poor credit the offer may be much higher, and the savings shrink or vanish.
You count the fee. Many lenders take an origination fee of a few percent from the loan amount. Compare the total cost, not just the rate.
The cards stay at zero. The loan only helps if the cards don't fill back up. Otherwise you end up with both.
When it doesn’t
If you could clear the card within a year or so, a 0% balance transfer may cost less. If the loan rate isn't much lower than 22.36%, keeping the card and paying more each month can match it. $400 a month on the card already takes it to 2 years and 10 months.
Have more than one debt?
Add your cards, loans and mortgage to see one debt-free date for all of it, and which to pay first.
Common questions
Does a personal loan hurt your credit?
Applying causes a hard inquiry, which usually lowers a score a little for a while. Moving card balances to an installment loan often lowers your credit utilization, which can help. Paying on time matters most.
Is the monthly payment higher with a loan?
It can be. A 3-year term on $10,000 at 12.55% is about $335 a month, compared with the $300 used here. That higher payment is part of why it finishes sooner.
How this payoff estimate is calculated
This example starts with $10,000 at a fixed 22.36% APR. The headline example pays $300 each month, with a smaller final payment if needed.
Each month, interest is calculated as the opening balance × APR ÷ 100 ÷ 12, then the payment is subtracted. This repeats until the balance is paid off. Total interest is the sum of those monthly charges; displayed dollar amounts are rounded.
Dates assume the first payment is in November 2026. Dates move forward with the calendar; this does not change the number of payments for the same inputs. There are no new charges, fees or rate changes in these examples. Rates are illustrative inputs, not loan offers or a quote for your account.
Actual statements can differ because of payment timing and daily interest. The CFPB explains how credit card companies calculate interest. See our debt payoff glossary for definitions.
Written and reviewed by Todd K. Ballenger. Read our editorial policy.
Educational estimate only, not financial advice. Interest here is charged monthly at APR ÷ 12; card issuers use your average daily balance, and real fees, rate changes and new charges will change your numbers. Disclaimer.