What Consolidating Card Debt Into a Personal Loan Really Costs
Meet Dana. She carries $15,000 in credit card balances at an average 24% APR, and she's making roughly $450 a month in payments that barely move the needle. At that rate, sticking with the cards keeps her in debt for years and hands the issuer well over $8,000 in interest before she's free. The minimum payment feels manageable, which is exactly the trap: most of each one is interest, so the balance refuses to shrink. So she does what the card companies hope you never sit down and calculate: she prices out a personal loan.
A 5-year unsecured personal loan at 11% APR changes the shape of the problem. On a clean $15,000 balance, the monthly payment lands near $326, and the total interest over the full term is roughly $4,560. Same debt, very different ending. The reason isn't magic. It's the interest rate doing what interest rates do, plus a fixed payoff date that the revolving card never gave her. A personal loan amortizes: every payment is split between interest and principal on a set schedule, and the balance is guaranteed to hit zero on a specific month. A credit card lets you ride the minimum forever.
Here's the part most people skip. That headline rate is only half the decision. Personal loans frequently carry an origination fee, often 1% to 8% of the amount borrowed, and lenders usually subtract it from what actually lands in your account. Borrow $15,000 with a 5% origination fee and you receive about $14,250, but you still owe and pay interest on the full $15,000. If your goal is to wipe out $15,000 of card debt, you'd need to borrow closer to $15,790 so the net proceeds cover the balance. That fee is exactly why the APR on the loan can sit higher than the quoted interest rate.
The comparison that matters is not card rate versus loan rate. It's the total you'll pay on the cards if nothing changes versus the total you'll pay on the loan, fee included. Run both. Dana's cards were on track to cost her thousands more than the consolidated loan, even after the origination fee, which made the move an easy call. For someone with a smaller balance, a high origination fee, or a loan rate that isn't much below the card rate, the answer can flip. The only way to know your number is to enter your real balance, the rate you've been quoted, the term, and the fee, and let the calculator show you the payment and the lifetime cost side by side. This calculator provides estimates based on the information you enter. For advice tailored to your situation, consult a qualified financial professional.