US Personal Loans
Debt Consolidation Loans in the US: Pros, Cons and When They Make Sense
Rolling card debt into one fixed payment lowers the rate only if you stop using the cards afterwards.
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- What it does
- One fixed payment replaces several
- Typical APR
- 10%-24% vs 24% on cards
- Main risk
- Reusing the cleared cards
- Best case
- Rate cut plus fixed end date
The rate cut is real
Card APRs run near 24%; consolidation loans typically land 10%-24%. On $15,000 that is $150-$200 a month of interest removed, and a fixed end date instead of revolving.
The failure mode is well known
Most people keep the cleared cards open and refill them, ending with both the loan and new card debt. Close or freeze the cards for the first six months.
Fees change the maths
A 5% origination fee on $15,000 is $750. If the rate saving does not clear that inside a few months, the loan is a sideways move.
Check the term honestly
A 60-month term on a small balance spreads the cost thin. Match the term to a payment you can hold, not to the lowest monthly figure offered.
FAQ
Does it hurt my credit?▾
A hard inquiry and a new account; utilisation usually falls, which helps.
Can I consolidate federal student loans this way?▾
No, that is a separate process.
Is a nonprofit DMP better?▾
Sometimes, if you cannot qualify for a loan rate below your card APR.
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