Credit card APRs are hovering near record highs, with the average new offer sitting around 24% to 28% depending on your credit score.
Meanwhile, personal loan rates for borrowers with good credit have been drifting lower, often landing in the 10% to 14% range.
That gap has made debt consolidation pitches flood mailboxes, inboxes, and social feeds across the country.
If you're carrying $10,000 across three or four cards at an average 26% APR and paying roughly $400 a month, a large chunk of that payment goes straight to interest.
Move the same balance to a personal loan at 13% over five years, and the monthly payment drops closer to $230.
Total interest paid falls from several thousand dollars to around $1,500, assuming you don't add new card debt along the way.
That last part is where most people get burned.
Lenders report that a meaningful share of consolidation borrowers run their old cards back up within a year or two, which leaves them with the loan payment plus new balances.
If you go this route, treat the paid-off cards as closed for everyday spending.
Keeping one for a small recurring bill and paying it off monthly can help your credit, but a fresh balance is the trap that undoes the entire point.
Lenders show a "starting at" number, then hand you a real offer based on your credit history, income, and debt-to-income ratio.
If your score is below roughly 670, the quoted rate can jump several points, and at that stage the savings may be thin.
It's worth pulling your free credit reports first, disputing any errors, and checking whether a local credit union offers a better deal than the big online names.
Some personal loans charge an origination fee of 1% to 8%, deducted from what you receive.
A 5% fee on a $10,000 loan means you get $9,500 but still owe $10,000 plus interest.
Read the truth-in-lending disclosure before signing anything, and compare the APR, not just the rate, across at least three lenders.
There's also a do-it-yourself alternative worth pricing out.
A 0% balance transfer card can park your debt interest-free for 12 to 21 months, though you'll pay a 3% to 5% transfer fee.
If you can clear the balance in that window, it often beats a loan.
If you can't, the rate snaps back to standard card pricing and you're worse off than before.
It can lower the cost of money you already owe, but it doesn't change the spending that created the balance.
Pair it with a written budget and a realistic payoff date, or you'll likely find yourself in the same spot a year from now.
Our take: run the numbers on a consolidation loan only after you've corrected the underlying cash-flow problem.
Final Thoughts
The rate savings are real, but they're only worth capturing if you've closed the door on the habits that piled up the debt in the first place.