{"id":12304,"date":"2025-03-24T20:19:23","date_gmt":"2025-03-24T20:19:23","guid":{"rendered":"https:\/\/finderica.com\/?p=12304"},"modified":"2025-03-24T20:19:23","modified_gmt":"2025-03-24T20:19:23","slug":"i-have-20000-in-credit-card-debt-should-i-take-out-a-personal-loan","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=12304","title":{"rendered":"I Have $20,000 in Credit Card Debt. Should I Take Out a Personal Loan?"},"content":{"rendered":"\n
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\"ScoreCard<\/p>\n

Dear Penny,<\/span><\/p>\n

I have $20,000 in credit card debt. I recently got an offer from a card for a personal loan. Should I take it, and what are the pros and cons for a personal loan?<\/span><\/p>\n

\u2014 Fielding Offers<\/span><\/p>\n<\/div>\n

Dear Fielding,<\/p>\n

Whether a personal loan is a good fit for you depends on a lot of factors. Consider how the credit card debt is currently impacting your finances and what you might do with a personal loan. Also consider how a loan payment would fit into your financial picture.<\/p>\n

A personal loan can be a useful way to deal with credit card debt, because the interest rate is usually lower than that on credit cards. If you use a personal loan to repay your credit card debt, you\u2019ll likely pay less over time.<\/p>\n

You\u2019ll also free up your credit card balances for more spending. That could be a pro, if you need access to that resource; or a con, if you don\u2019t want the possibility of accruing more debt.<\/p>\n

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Heard of These Credit Card Debt Tips?<\/h3>\n

If you\u2019re a good credit card user, you already know how payment history, credit utilization and the length of your credit history affect your credit score.<\/p>\n

But millions of Americans overlook\u00a0these easy tips<\/a> that could help them manage credit card debt even more wisely.<\/p>\n

Read more<\/a> to boost your credit knowledge and keep your credit score in check.<\/p>\n<\/div>\n

One con to refinancing your credit card debt into a personal loan is that your minimum monthly payment might go up. With credit cards, a typical minimum payment is around 2% of your balance \u2014 so maybe $400? If you get a $20,000 personal loan with a three-year term, your payment would be more like $660 per month. With the latter, your debt will be eliminated at the end of three years, but with the former, you have a couple hundred dollars extra each month for other expenses.<\/p>\n

Most importantly, though, consider the source of this loan offer before diving in. An offer that comes to you cold from a lender or creditor is usually not the best deal you can find.<\/p>\n

If you want to use a personal loan to refinance your credit card debt or for any other purpose, shop around to find the terms that work best for you. Start with a local bank or credit union, especially anywhere you already have an account. Use a loan calculator<\/a> to get an idea of what kind of term length and monthly payment might be feasible for you (an average personal loan interest rate is around 12% right now, according to Fed data<\/a>).<\/p>\n

Dana Miranda is a Certified Educator in Personal Finance\u00ae and author of YOU DON\u2019T NEED A BUDGET. She writes <\/em>Healthy Rich<\/em><\/a>, a newsletter about how capitalism impacts the ways we think, teach and talk about money.<\/em><\/p>\n

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