The Federal Reserve left its benchmark rate unchanged at its latest meeting, which means the cost of carrying credit card debt is not going anywhere fast.
Average annual percentage rates on cards are still hovering around 21%, close to record highs.
For anyone dragging a balance from month to month, that math is brutal: a $6,000 balance at that rate costs roughly $105 a month in interest, before you pay down a single dollar of principal.
That is exactly why searches for debt consolidation loans keep climbing.
Trade several high-rate cards for one fixed-rate installment loan, usually somewhere between 8% and 24% APR depending on your credit score, and pay it off over two to seven years.
The catch is that the loan itself is not a rescue.
If your credit is strong, the spread can be real.
Moving $8,000 of 21% card debt into a 12% personal loan could cut your monthly interest by roughly $60 and give you a firm payoff date instead of a revolving target that never closes.
That is meaningful money for a household already stretched by grocery bills that are up sharply from four years ago and rents that have not cooled in most metros.
If your credit is weak, the offer you get may land at 22% or higher, which is barely better than the cards you are trying to escape.
Some lenders also charge origination fees of 1% to 8%, skimmed off the top before the money reaches you.
There is a second trap, and it is the one that quietly wrecks people.
Consolidating cards frees up their credit limits.
A large share of borrowers run those cards back up within a year or two, and now they owe the loan and the cards.
Getting this right comes down to three moves.
First, get quotes from at least three lenders, including a credit union, and compare the APR after fees, not the teaser rate.
Second, pick a term you can actually afford, because stretching to seven years lowers the payment but raises total interest.
Third, freeze or close the paid-off cards, or at minimum remove them from your phone's wallet.
A consolidation loan is a tool for people with a real payoff plan, not a mood.
If your spending is still outrunning your income, the loan just rearranges the furniture in a burning house.
Check whether a nonprofit credit counselor in your state offers free sessions before you sign anything.
It costs you an hour and can save you thousands. **The Takeaway** Debt consolidation can genuinely lower your interest bill, but only if the underlying spending problem is already handled.
Run the numbers with fees included, and treat the freed-up cards as closed, not as backup.
Final Thoughts
Used carelessly, this loan does not erase debt.