Personal Loan vs Credit Card Debt: Which Costs Less?
· 1 min read · Currency & Savings
If you're carrying a balance on a credit card, a personal loan is almost always the cheaper way to pay it off — the interest rate gap is usually bigger than people expect.
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Why credit cards cost more
Credit card interest rates are typically far higher than personal loan rates, and because credit card interest compounds on any unpaid balance, the gap widens the longer a balance is carried.
When a personal loan makes sense
Consolidating higher-interest debt (like credit cards) into a single lower-interest personal loan with a fixed repayment schedule can meaningfully reduce total interest paid and gives a clear payoff date — something revolving credit card debt doesn't offer.
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Frequently asked questions
Is it always worth switching from credit card debt to a personal loan?
Generally yes if the personal loan's rate is meaningfully lower and you avoid running the credit card balance back up — otherwise you risk ending up with both debts.
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