Should You Get a Personal Loan to Pay Off a Credit Card?

A personal loan can be used for debt consolidation, which in this context means replacing one or more revolving credit card balances with a single fixed-rate installment loan

The case for doing this often comes down to a simple comparison: if your cards have APRs of 20% to 28%, and you can qualify for a personal loan at a lower rate, consolidating may help you pay less interest over time. Debt consolidation is also a good idea if you want to improve your credit score by lowering your credit utilization in the process.

As of late 2025, the average APR on credit card accounts assessed interest was above 22%, according to the Federal Reserve. Personal loan APRs for well-qualified borrowers typically range lower—often between 11% and 15%—though the exact rate depends on your credit profile, income, and the lender's underwriting criteria.

How other borrowers used personal loans to pay off credit cards

The average BHG Financial borrower consolidates about $46,000 in revolving debt. Many of these borrowers also have strong income profiles—often exceeding $200,000—and meaningful assets, but want a more efficient way to reorganize high-interest balances.

Broader data from a recent BHG Financial survey shows a similar divide in how people approach repayment. Some feel stuck—15% of respondents say they expect to carry credit card debt for the rest of their lives. Fourteen percent of respondents said they're hoping for a raise or a windfall to pay off their debt in full.

Others are more proactive: 12% report using or planning to use a debt consolidation loan. What stands out is not just the strategy—but the confidence associated with it. Respondents who reported having a defined repayment structure were more likely to say they could keep up with their obligations.

Consolidating personal debt may help improve your FICO® score. In fact, most BHG customers see a 30+ point increase in their score within a few months of consolidating personal debt.

Once you decide to explore consolidation using a personal loan, the process is straightforward. First, compare your current credit card costs against potential loan offers. Then, choose a structure that improves your overall repayment plan.

1. List balances and rates

Start by pulling together every credit card balance, its current APR, and the minimum monthly payment.

Next, calculate your weighted average APR. Multiply each balance by its rate, add the totals together, then divide by your total balance.

That number becomes your baseline. Any loan offer should beat it—after fees—to generate meaningful savings.

2. Prequalify without impacting your score¹

Most reputable lenders, including BHG Financial, offer personal loan prequalification, which lets you check estimated rates with a soft credit inquiry.

A soft inquiry does not affect your credit score. A hard inquiry only appears on your credit report once you formally accept and fund the loan.

Prequalifying with two or three lenders gives you a clearer view of available terms before committing.

3. Choose an amount, term, and rate

Make sure the loan is large enough to consolidate all of your credit card debt. Loan fees may affect how much money you actually receive. For example, if the lender charges an origination fee, check whether it is deducted from the disbursement or added to the loan balance.

Then, consider the loan term. A shorter term increases the monthly payment but reduces the total interest paid. A longer term lowers the monthly payment so you can preserve cash flow, but allows interest to accrue for a longer period. Most borrowers aim for the shortest term their budget can comfortably support.

4. Fund and pay cards promptly

Once the loan is funded, pay off each credit card as soon as possible. Some lenders send payments directly to creditors, while others deposit funds into your bank account and allow you to manage the payoff yourself.

After the payments are complete, confirm that each balance shows $0 and monitor your credit report to ensure your utilization updates within 30 to 60 days.

Consolidation is a powerful tool, but it’s not a solution by itself. The right structure should lower costs and simplify repayment without creating new financial pressure.

Advantages of paying off a credit card with a personal loan

A personal loan can improve the structure of high-interest credit card debt in several ways:

• Lower interest costs: A lower APR reduces total interest paid, especially on large balances.
• Simplified repayment: One fixed monthly payment simplifies budgeting and eliminates variable-rate exposure.
• Ability to consolidate large balances: Personal loans for debt consolidation can reach as high as $250,000² with BHG Financial, allowing borrowers to consolidate significant credit card debt at one time.
• Clear payoff date: Installment loans provide a defined timeline for becoming debt-free.
• Potential credit score benefits: Paying off card balances can significantly improve your credit utilization ratio and, in time, your credit score. In fact, most BHG customers see a 30+ point increase in their score within a few months of consolidating personal debt. 

Disadvantages of paying a credit card with a personal loan

At the same time, consolidation comes with tradeoffs that borrowers should understand before moving forward:

• Origination fees: Fees reduce the net proceeds from the loan and increase the overall cost.
• Extended repayment timelines: Longer terms lower monthly payments but can increase total interest paid, even at a lower rate.
• Risk of rebuilding balances: If new credit card spending occurs after consolidation, the overall debt level can increase again.
• Fixed monthly obligation: A personal loan creates a predictable payment schedule, but that payment becomes a multi-year commitment.

How personal loan debt consolidation compares to other options

Several strategies can help reduce credit card debt. Balance transfers work well when your balance is smaller—typically under $20,000—and you're confident you can pay it off within the 0% promotional window (usually 12 to 21 months). However, transfer fees of 3% to 5% apply upfront, and the interest rate jumps once the promotion ends.

DIY strategies, such as the avalanche or snowball payoff methods, require no new credit and no fees. These approaches work well for disciplined borrowers with manageable balances and stable cash flow. However, when APRs are above 20%, interest can accumulate quickly, which may slow progress.

Home equity loans or HELOCs allow homeowners to borrow against their property value. These options can offer competitive interest rates for large balances, but they also introduce risk. Because the loan is secured by your home, missed payments could ultimately lead to foreclosure.

A personal loan for consolidation is often the strongest fit when the balance is too large for a balance transfer card, you want a fixed payoff timeline, and you prefer to avoid the risks of home equity financing or other secured options.

Paying off your credit cards with a debt consolidation loan from BHG Financial is best for high-income professionals with large credit card balances who want a predictable repayment plan, competitive fixed rates, and the simplicity of one monthly payment.

BHG Financial offers large unsecured personal loans designed to reorganize high-interest debt into a single solution. Qualified borrowers may access up to $250,000² with fixed rates and terms of up to 10 years.^2,3

Learn more about BHG’s debt consolidation loan options and see whether this approach could help simplify your credit card repayment strategy.