Americans are carrying more credit card debt than ever, and the interest on it is punishing.
The average card APR has been sitting above 20% for months, which means a $6,000 balance can cost you over $100 a month in interest alone.
That math is pushing a lot of people to look at debt consolidation loans again.
You take out a fixed-rate personal loan, use it to pay off your cards, and then make one predictable monthly payment.
If your credit score is decent, those loans are going for roughly 10% to 12% right now, according to Bankrate data.
That's a big drop from card rates, and it's the entire reason this strategy keeps trending.
But the savings only show up if you actually qualify for a good rate.
Borrowers with fair or poor credit can get quoted 25% or higher, which defeats the purpose.
Before you fill out applications, check your score for free and get prequalified with a few lenders.
Prequalification uses a soft credit pull, so it won't ding your score.
Many personal loans charge an origination fee of 1% to 8%, taken right out of what you borrow.
On a $10,000 loan, that could be $800 gone before you pay off a single card.
Some lenders skip this fee entirely, so it pays to compare offers side by side.
The trap is what happens after the cards hit zero.
If you keep the accounts open and start swiping again, you've now got a loan payment plus new card balances.
Financial counselors see this constantly.
A common fix is to close the paid-off cards or freeze them somewhere inconvenient.
Add up your total balance, compare your current monthly interest to the loan payment, and figure out how long repayment takes.
A five-year loan at 12% on $10,000 runs about $222 a month.
If that's comfortably under what you're paying now, the math can work in your favor.
Federal student loans come with protections like income-driven repayment and forgiveness programs that a private consolidation loan won't have.
Mixing those into a personal loan can cost you options you can't get back.
It lowers the cost of money you already owe, but it doesn't change the spending that created the balance.
Used carefully alongside a real budget, it can shave hundreds off your monthly interest and give you a clear finish line.
Our take: a consolidation loan is worth it only when the rate drops meaningfully and the cards stay paid off.
Final Thoughts
Do the math on fees and total repayment first, because a lower payment stretched over more years isn't always a win.