Here's a rare piece of good news for anyone staring down credit card debt: personal loan rates have started to ease after two punishing years.
According to recent data from Bankrate and other rate trackers, the average two-year personal loan now sits closer to 12%, down from a peak near 14% in late 2023.
That's not a dramatic drop, but on a $10,000 loan it works out to real money—roughly $15 to $20 less per month, or a few hundred dollars saved over the life of the loan.
Personal loan rates tend to follow the Federal Reserve's benchmark rate, and with the Fed cutting rates through late 2024 and into 2025, lenders have slowly passed some relief along.
The catch is that the advertised rates you see on bank websites are reserved for borrowers with excellent credit.
If your score is below 670, you may still be quoted rates in the high teens or even low 20s, which is barely better than the average credit card.
Someone with a 750-plus credit score, steady income, and low existing debt can now find rates between 7% and 11% from online lenders like LightStream, SoFi, or a local credit union.
That's meaningfully cheaper than a typical card APR of 20% or more.
For that borrower, consolidating $8,000 of card debt into a three-year personal loan could save well over $2,000 in interest.
If your credit is middling, don't panic—but do shop around.
Credit unions often beat big banks for borrowers in the 640-to-700 range, and they're more willing to look at your whole financial picture instead of just a score.
Getting prequalified with three or four lenders takes about 15 minutes, uses a soft credit pull, and won't hurt your score.
One warning worth repeating: personal loans are unsecured, meaning nothing is collateralized, but the debt is still yours.
If you consolidate cards and then run the balances back up, you've doubled your problem.
Cut up the cards or freeze them before you sign anything.
And watch for origination fees, which typically run 1% to 8% of the loan amount and quietly eat into your savings.
Also ignore the flood of "instant approval" offers hitting your inbox and mailbox.
Legitimate lenders don't demand an upfront fee to release funds, and no real bank asks for gift cards or wire transfers to "verify" your identity.
The bottom line: rates are moving in the right direction, but the deal you get depends far more on your credit profile than on the Fed.
Spend an afternoon comparison shopping before you sign, and read the fine print on fees.
Our take: this is a decent moment to refinance expensive debt, not a reason to borrow for things you don't need.
If a personal loan gets you out of 24% card interest and you change your spending habits, it's one of the few financial moves that genuinely pays off.
Final Thoughts
If it just funds a bigger lifestyle, you'll be back here next year.