Personal Loan vs. Credit Card Debt

I was reading an article where a personal finance consultant used a personal loan from Upstart to pay off some credit card debt. I was curious what everyone thought of that idea.

For my particular case, I’m torn 50/50. (First I had to admit my mistake & big ‘oops’ moment realizing I have about 10k in credit card debt now… yikes.) I know the absolute #1 way to fix this is to budget and change spending patterns, which I’m already doing. The concept of a personal loan intrigues me though as another way to combat this debt. I know there are pros (lower interest rate for one) and cons (like another ding to my credit score). Here’s my example:

  • Card 1- 1135 owed 26.24%
  • Card 2- 2925 owed 25.74%
  • Card 3- 1230 owed 26.15%
  • Card 4- 810 owed 22.15%
  • Card 5- 900 owed no interest till 9/20
  • Card 6- 991 owed 25.14%
  • Card 7- 1430 owed 25.99%

I should clarify that these are all the household cards. The total payments on these is about $350 a month. Now I looked at Upstart’s options for my situation.

  • Loan 1- $10,000 5 year 18.4%
  • Loan 2- $12,500 5 year 18.95%

I included a sort of balloon amount as an “in case” on option 2. Both options are lower than the $350/month payments we already make at $247 and $313.

What would you do in this case, fellow Penny Hoarders? Would you take one of the loans to ensure a lower interest rate? Or would you tackle the current card usage with the avalanche or snowball method?


Personally, I would tackle the current card situation with the snowball method. I would do this because I might be tempted to continue adding to credit card debt if it were back at 0$, and because I have seen time and time again clients of mine do that very thing.

So yes I realize that the interest rate is higher. But personally, that is what I would do, and what I did do.


@kellyfromkeene That’s totally fair! I don’t think I’d be tempted to spend with the balances down, but I realize that life happens and it’s not a guarantee. (Or else I probably wouldn’t even have considered the loan idea.)

The snowball method is what I’m doing for now, but I’m hoping once a card or two are paid off, I can focus on the highest interest rate. Hopefully the combination of momentum and fighting back the interest will prove successful!

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My husband & I just consolidated our credit card debt with a personal loan. My first advice is to go to a bank (credit union preferably) to seek your personal loan options there. Upstart gave us interest rates around 18% as well, but our credit union was able to give us a rate of 7.99%! However, depending on if you own a home, a home equity line of credit is another option. You are in a similar debt situation as we were - the amount is not crazy huge, but it can seem daunting when you are charged 25%+ interest every month.

This move will save us thousands in interest for basically the same monthly payment. It also gives us something that my husband values – a light at the end of the tunnel! Our loan is for 3 years, with no early payoff penalties, so we are shooting to pay it off in 2 years.

Credit card debt can seem endless; the snowball method is great & works for some people, but not everyone. I’m so glad we made the move to get the personal loan!


I personally took out a loan with Upstart because the interest rate was lower and the money I would save just in that would help me. I haven’t charged on my CC but it is tempting to. You have to remind yourself over and over not to. I gave one card to my sister just in case and other’s I froze them.


@agonzalez I bank with a credit union and I’m kicking myself a little. They sent me information about a personal loan a couple months back, but I didn’t inquire more! The “promotion” or whatever it was seems to have ended, so I’m not sure what they’ve got now. Maybe’ll I’ll ask sometime soon.

I very recently purchased a house, and I won’t lie that I have NO IDEA what I’m doing or what half of the paperwork means. Since it was only back in August, I didn’t think I should do much until everything is better established, if that makes sense.


@mountainfan If you just purchased your home in August, you don’t have enough equity into it to do a home equity line of credit. Basically a HELC leverages the money you’ve paid into your home already (your “equity”) & lets you borrow against that. I’m not an expert on this stuff by any means, but that’s how it was explained to me.

As for your credit union - it’s worth asking about! We sat down with someone & asked all of our questions (my husband had a LOT lol) before even starting the application, so you can always weigh your options before taking the hit to your credit score of a loan application.

I think the hardest adjustment for anyone trying to pay off credit card debt (at least this was true for me) is considering that CC as untouchable & living solely within the means of your cash inflow. I do like the suggestion of giving one of them to a friend/ family member to save yourself the temptation… I might try that one myself!

Good luck!!! I hope you find whatever works for you! I’m on the same journey


To A. Gonzalez I’m interested in knowing what questions your husband asked in regards to the loan. I have less than $3000 in credit card debt, but my debt to credit ratio is high (if I said that correctly). Anyway, I want to consolidate because the interest rates are eating up any payments I’m making, so the principal just increases.

@melanie.t his questions were related to our options (home equity, personal loan, secured loan, & the various choices within each), terms (we got it for 3 years), fees (no early payoff fees, standard late fees, etc), how it will affect our credit (a net improvement - we’ll get dinged for the credit inquiry & for having a “maxed out” line of credit, but we’ll show 2 cards getting paid off in full & for having a set loan instead of open line of credit), etc… he basically just wanted to know what we were getting in to.

In your case, have you thought about getting a balance transfer card? Your CC debt is so small, you could get a card that has a 0% intro APR on balance transfers, & as long as you pay it off within the terms, you’d have 0 interest. Intro periods are anywhere from 12 months to 20 depending on the card, so you have to decide if you can meet that payment every month because it is a shorter period than a loan would be. For example, a balance transfer card with an introductory period of 18 months for a total transfer of $3K would mean you’d pay $166.67 every month. Also, you’d have to be disciplined enough to not use any of the credit cards! but it’s another option to consider.


thanks for all the input i enjoy learning from you all, i don’t have any credit card debt, i am greatful for that

Thanks for all this input and my credit Union had a special rate of 3.99% for 24 months and then 12.99% after that and on any new purchases it will be 12.99%. I auto pay $200/mo on the debt of about $2200, and trying not to charge anything else