It depends entirely on the interest rate spread and your discipline. A personal loan at 9%-12% APR to pay off $30,000 in credit card debt at 22% APR can save $5,000-$10,000 in interest over a 4-5 year payoff. The math works. The risk is that 60%+ of consumers who consolidate credit card debt with a personal loan run the cards back up within 24 months and end up worse off than they started.
The math when it works. $30,000 at 22% APR with $700 a month in payments takes about 6.5 years and costs $24,000 in interest. The same $30,000 refinanced into a 5-year personal loan at 10% APR has a $637 monthly payment and costs $8,200 in interest. Net savings: roughly $16,000 in interest, plus 18 months off the payoff timeline.
The math when it does not work. The same $30,000 refinanced at 18% APR in a 7-year personal loan has a $568 monthly payment but costs $17,700 in interest. Compared to aggressively paying the credit cards, this saves only $6,300 in interest, and the longer term keeps you in debt 6 months longer than the credit-card path.
Required loan terms. For consolidation to actually save money, the loan APR should be at least 5 percentage points below your weighted-average credit card APR, and the loan term should not exceed 5 years. A 7-year loan at a slightly lower rate often costs more in total interest than the credit cards would have.
What credit score gets a good rate. 750+ usually qualifies for the best rates (7%-9% APR with major lenders like SoFi, LightStream, or a credit union). 670-749 typically gets 10%-15% APR. 620-669 usually sees 15%-25% APR, which often is not enough of an improvement over credit cards to be worth the consolidation. Below 620, the loan offers are usually predatory or unavailable.
The behavioral risk. Consolidating credit card debt with a personal loan zeros out the cards, which feels like progress. Many consumers then start using the cards again because they have available credit. Within 12-24 months they have the personal loan plus a fresh balance on the cards, often more debt than they started with. This is the single most common consolidation failure pattern.
How to avoid the behavioral trap. Close the cards or freeze them physically. Set up the personal loan auto-payment from a separate checking account. Build an emergency fund of $500-$1,000 before consolidating so the next surprise expense does not hit the cards. Consider a debt management plan as an alternative; the DMP closes the cards as a structural condition.
Lenders to look at. SoFi, LightStream, Marcus by Goldman Sachs, and Discover Personal Loans are major banks with competitive rates for prime borrowers. Local credit unions often beat national bank rates by 1-3 percentage points and have more flexible underwriting. Online lenders like Upgrade and Upstart serve a wider credit range but at higher rates.
When a DMP beats a personal loan. If your credit is below 670, a personal loan rate is unlikely to be much better than your credit cards. A DMP through a nonprofit credit counselor consolidates the same debt at 6%-9% with no credit check required, structured payoff over 4-5 years, and required closure of the cards as a condition. The downside is the cards are closed during the plan and your credit score will dip.