Should You Get a Personal Loan to Pay Off Your Credit Cards?

Written by Banks Editorial Team
4 min. read
Written by Banks Editorial Team
4 min. read

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Are you saddled down with credit card debt? It can be a struggle to juggle monthly bills and the minimum payments owed to creditors. Furthermore, continuing to pay only the minimum each month means you’ll likely remain indebted to the credit card issuers for several months or years to come. 

A personal loan could be a viable option to find relief. But there are some drawbacks to consider. 

In this guide, you’ll learn how to pay off your high-interest credit card debt with a personal loan, the benefits and drawbacks of this method and where to get help with your balances if they’re too excessive to manage. 

Accredited Debt Relief
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Pay Off Your High Interest Credit Cards

Accredited Debt Relief experts can help you figure out the best way to get rid of credit card debt and set up a personalized program to get it done faster.

How to Pay Credit Cards Using a Personal Loan

Below is a breakdown of how to use a personal loan to pay off credit card debt: 

  • Step 1: Explore personal loan options. Not all personal loans are the same. So, you want to shop around with traditional banks, community banks, credit unions and online lenders to find a product that offers a competitive interest rate and other favorable loan terms. It’s also best if the lender doesn’t assess origination fees and prepayment penalties. Most importantly, consider lenders that feature an online pre-qualification tool on their website that lets you gauge your eligibility for a loan and possible terms with no impact on your credit score.
  • Step 2: Use the loan proceeds to pay off your outstanding credit card balances. Most lenders don’t stipulate how the funds can be used. But you want to promptly pay the credit card issuers to avoid the temptation to spend the loan proceeds elsewhere. Otherwise, you risk accumulating even more debt.
  • Step 3: Avoid using credit cards. To piggyback off the last point, paying your credit cards off and using them again defeats the purpose. You’ll have both the credit card debt and personal loan debt to worry about, which is bad news for your budget.
  • Step 4: Start repaying your personal loan right away. Now that credit card debt is gone, you can use the money that was once allocated for minimum payments to pay down your personal loan. If possible, pay more than the extra each month to accelerate repayment and save a bundle on interest.

Is It a Good Idea to Use a Personal Loan to Pay Off Credit Card Debt?

Consider the benefits and drawbacks before you decide to use a personal loan to pay off credit card debt. 

Accredited Debt Relief
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Pay Off Your High Interest Credit Cards

Accredited Debt Relief experts can help you figure out the best way to get rid of credit card debt and set up a personalized program to get it done faster.

Considering Risks and Benefits

Pros of Using a Personal Loan to Pay Off Your Credit Cards

Here are some key advantages to keep in mind: 

  • You can escape the minimum payment trap and free up funds in your budget. 
  • You’ll streamline the repayment process by only paying one creditor instead of several each month. 
  • You can save a bundle in interest if the rate on the personal loan is lower than what you’re currently paying. 
  • You can get out of credit card debt quickly and pay off your personal loan at a faster rate than you would by paying the minimum to the credit card issuer each month. 
  • You can improve your credit score since your credit utilization, or the amount of available credit you have in use, will drop when you pay off the credit cards. 

Cons of Using a Personal Loan to Pay Off Your Credit Cards

Unfortunately, there are also downsides to paying off your credit cards with a personal loan: 

  • You could pay steep origination fees to take out a personal loan. 
  • You could rack up more debt if you use the personal loan for some other purpose or pay off the cards and use them again. 
  • You may not qualify for a personal loan with a low-interest rate if your credit score is low. 
  • You could struggle to make the personal loan payments if you get a sizable loan with a short repayment period. 
  • Your credit score could decrease if the credit card issuer closes the accounts once the balances are paid in full.

Get a No-Obligation Consultation To Take Out A Consolidation Loan To Pay Off Your Credit Card Debt

Not sold on the idea of taking on more debt to consolidate your credit card debt? Explore these viable alternatives: 

  • Credit counseling through a non-profit agency (only work with reputable entities that offer free sessions from certified credit counselors) 
  • A balance transfer credit card (if you’re able to pay off your balances within the promotional interest period)  
  • A hardship program through your credit card issuer (if you’re eligible and can meet the criteria to remain in the program) 

But if you’re overwhelmed by credit card debt and struggle to make the minimum monthly payments, consider Accredited Debt Relief. The firm offers a debt resolution program that lets you consolidate your balances without taking out a loan. To date, it’s helped resolve over $500,00 million in debt for over 140,000 clients. 

If you enroll, its team of experts will work with your credit card issuers to negotiate settlement offers. Ultimately, you could repay less than you owe and get out of debt faster. 

There are no enrollment fees, minimum credit score or income requirements. Individuals with $10,000 or more in unsecured debt that are willing to make monthly payments in a Dedicated Account could be debt-free in as little as 12 months. 

Here’s how the Accredited Debt Relief program works: 

  • Get a free phone consultation. 
  • Work with a Certified Debt Specialist to determine a monthly deposit amount. 
  • Make monthly deposits into a Dedicated Account that will be used to pay creditors as settlement offers are reached. (Note: most participants in debt settlement programs stop paying creditors after enrolling to expedite the process). 
  • Allow Debt Resolution Negotiators to work with your creditors to reach fair settlements. 
  • Review and approve settlement agreements as they are presented to you. 
  • Settle your debts and pay the settlement fee. (Note: Funds are transferred directly from your Dedicated Account to the creditor. A debt settlement fee, which is 15 to 25 percent of the settlement amount, is also paid to the debt relief company from this account). 
  • Continue to make monthly deposits until every debt enrolled in the program goes through the negotiation process. 

Quick note: Your credit score will likely take a hit by participating in the program. However, you can start rebuilding your credit health by adopting responsible debt-management habits. 

Are you interested in learning more about how Accredited Debt Relief can help you meet your goals? Get started by submitting an online inquiry to request a free consultation. 

Accredited Debt Relief

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