Personal loans for credit card debt consolidation.
The concrete math — how a $20K consolidation typically saves $28K in interest and 23 years of payments.
Consolidating credit card debt with a personal loan is the highest-impact use case: replacing 24-29% APR card debt with a 9-15% APR fixed loan typically saves $2,000-$8,000 in interest on $15K-$25K balances. Math works best when (1) consolidation APR is at least 5 points below card APR, (2) you stop charging new debt on cards after consolidation, and (3) your credit is 670+. Below 670, the math is tighter — secured loans, credit-union member loans, or nonprofit debt management plans often beat unsecured consolidation loans.
Why credit card debt is so hard to escape
Average US credit card APR was 24.92% in late 2024 (Federal Reserve data, lendingtree.com source). Making the minimum payment on $20,000 of card debt at 25% APR takes 28 years to pay off and costs $33,000 in interest.
The math: minimum payments on credit cards are typically 1-2% of balance. At 1% minimum + interest, the principal barely moves while interest compounds. Cards are designed to keep balances revolving.
Concrete consolidation math
$20,000 of credit card debt scenarios:
| Approach | Monthly payment | Total cost | Payoff time |
|---|---|---|---|
| Card minimums (25% APR) | ~$400 (declining) | $53,000 | 28 years |
| Consolidation loan, 12% APR, 60mo | $445 | $26,700 | 5 years |
| Consolidation loan, 9% APR, 60mo | $415 | $24,900 | 5 years |
| Savings (vs minimums) | — | ~$28,000 | ~23 years faster |
When consolidation works
- Loan APR is 5+ points below card APR. If you can only qualify for 22% APR consolidation and cards are 24%, the savings aren't worth the work.
- You stop charging on the cards. Otherwise you end up with consolidation loan + new card debt = worse off.
- You have a payoff plan. Stretching $20K over 7 years vs 3 years means more total interest even at a lower rate.
Alternatives for bad-credit consolidation
If your credit is below 670, unsecured consolidation loans typically come in at 18%+ APR — too high to save much vs cards. Better options:
- Nonprofit Debt Management Plan (DMP) through NFCC-accredited agencies. They negotiate 6-9% effective APR with creditors. 4-5 year payoff. Single monthly payment.
- Credit union member loan. Often 12-18% APR for fair credit; cheaper than online subprime lenders.
- Secured personal loan. Backed by savings or vehicle; APR 8-15% even at 600 credit.
- 0% balance transfer card (if any of your cards qualify). 15-21 months interest-free; pay off as much as possible during promo.
See our full guide on debt consolidation for bad credit for the math comparing these.
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