Take $15,000 of card debt and consolidate it into a personal loan at 11.40%. Over 36 months you'll pay about $2,781 in interest. Stretch the same loan to 60 months and the payment drops by $165 a month, but the interest climbs to $4,748.
Same loan, same rate, $1,967 more. That's the trap.
Where rates stand
The Federal Reserve's June 5 report put the average 24-month personal loan from commercial banks at 11.40%, versus 21.52% on credit card accounts that paid interest (Federal Reserve, G.19).
People are leaning on credit, too. Revolving credit, mostly cards, grew at a 10.4% annual pace in April, and stood at $1.35 trillion in the Fed's report.
That rate gap is real. A personal loan can absolutely save you money. You just have to compare the right numbers.
Run the numbers
$15,000, three ways:
| Keep it on cards at 21.52%* | Personal loan, 36 months at 11.40% | Personal loan, 60 months at 11.40% | |
|---|---|---|---|
| Monthly payment | $494 | $494 | $329 |
| Months to pay off | 45 | 36 | 60 |
| Total interest | ≈ $6,860 | ≈ $2,781 | ≈ $4,748 |
\Paying the same $494 a month on the cards. Illustrative: average rates from the Fed's G.19 report; your offer depends on your credit.*
The 36-month loan saves about $4,079 versus staying on the cards. The 60-month version still beats the cards, but gives back nearly half of those savings.
The 4 numbers to compare on every offer
- APR, not the "rate." The APR includes certain fees, so it shows the real cost. Two loans with the same interest rate can have very different APRs.
- Origination fee. Often taken out of the loan before you get the money. Example: borrow $15,000 at 11.40% for 36 months with a 5% fee, and you only receive $14,250 while repaying the full $15,000. That pushes the effective APR to roughly 15%.
- Term length. Shorter usually means less total interest. Pick the shortest term whose payment you can reliably make.
- Total cost. Monthly payment × number of months, plus fees. That one number tells you the most.
Fee check
- Origination fee: ask whether it's deducted from the loan or added to it, and borrow enough to actually pay off the cards.
- Prepayment penalty: make sure you can pay the loan off early without a fee.
- Late fees: set up autopay.
- The cards you just paid off: they're not a fee, but they're the biggest risk. The CFPB notes you might pay more overall depending on the loan's length, fees and costs, and running the cards back up makes it worse ( CFPB ).
Who a personal loan fits
- Good fit: steady income, decent credit, a payment you can handle at 36 months or less, and a plan to keep the cards at zero.
- Think twice: only a 60- or 72-month term makes the payment work. That's a sign the debt may need a different approach.
- Get help first: you're already missing payments. A nonprofit credit counselor can review options before you take on a new loan ( FTC ).
Do this today: get two or three prequalified offers (many lenders prequalify with a soft credit check, which doesn't affect your score), then line them up by total cost, not by monthly payment.
Sources
- Federal Reserve, G.19 Consumer Credit (April 2026 data) , June 5, 2026
- Consumer Financial Protection Bureau, What is the difference between credit counseling and debt settlement, debt consolidation, or credit repair?
- Federal Trade Commission, How To Get Out of Debt
Rates, fees and offers change often and depend on your credit and the lender. This article is for general information, not individual advice.