Credit Card vs Personal Loan: When Each Costs Less
**Credit cards** charge interest on revolving balances—minimum payments stretch payoff for years. **Personal loans** fix rate and term, often lowering APR for disciplined borrowers consolidating high-rate card debt.
Step by step
1. List APR and balances
Weighted average card APR vs quoted loan APR including origination fee.
2. Model payment paths
Fixed loan payment vs card minimum + extra—compare total interest and months to zero.
3. Avoid new card debt
Consolidation fails if balances run up again after the loan pays cards off.
Card vs installment loan
Loans win when APR drops materially and spending stays controlled.
- Credit card: Flexible; high APR common; minimum payment trap.
- Personal loan: Fixed schedule; closing cards optional; origination fees.
Use our calculators
Common mistakes
- Consolidating without stopping new charges
- Ignoring loan fees in APR comparison
FAQ
Does consolidation hurt credit?
Short-term inquiry and new account; utilization drop on cards often helps over time.