--- title: "Is a debt consolidation loan worth it? Compare it with your cards" description: "A guide to whether a debt consolidation loan is worth it: compare total interest and fees with your cards, using the Fed's latest rates on a 6,000 balance." author: "Wealtie Team" published: 2026-11-10 updated: 2026-11-10 category: "Budgeting" canonical: https://wealtie.com/blog/debt-consolidation-loan --- # Is a debt consolidation loan worth it? Compare it with your cards A debt consolidation loan is worth it when its total cost, fees included, is lower than paying your cards down at the same monthly amount. At the Fed's latest average rates, 6,000 costs about 1,072 on a two-year loan with a 300 fee, against about 1,577 on cards. ## Key takeaways - Compare the total cost of a consolidation loan, including fees, with what your cards would cost at the same monthly payment. - In the Fed's G.19 data for the third quarter of 2026, card accounts assessed interest averaged 22.36% and 24-month personal loans 11.90%. - On 6,000, a 24-month loan at 11.90% with a 300 fee costs about 1,072, against about 1,577 paying cards at 300 a month. - A loan only helps if you stop adding to the cards, because a cleared card can fill up again. ## Is a debt consolidation loan worth it? It's worth it if the loan costs less in total than paying your cards off at the same speed, and if you stop using the cards. A loan with a lower rate can still lose once fees are added, and it can make things worse if the cards fill back up. ## How do you compare a loan with your cards? Work out the total cost of each at roughly the same monthly payment. The [Federal Reserve's G.19 data](https://www.federalreserve.gov/releases/g19/current/) gives average rates at commercial banks for the third quarter of 2026 (preliminary figures): 22.36% on credit card accounts assessed interest, and 11.90% on 24-month personal loans. Here's 6,000 of card debt both ways: | Option | Monthly payment | Months | Interest and fees | | --- | --- | --- | --- | | Pay the cards down | 300 | 26 | 1,577 | | 24-month loan, plus a 300 fee | 282 | 24 | 1,072 | ![Cost of clearing 6,000 of card debt. Cards at 22.36%, 300 a month: 1577.39, Loan at 11.90%, plus 300 fee: 1071.86.](https://us-1-s3.polodev.net/wealtie-blog-media/posts/2026/11/cost-of-clearing-6-000-of-card-debt-cards-at-22-36-300-a-b7c8fb2c71.webp "Source: Federal Reserve G.19, Q3 2026 (preliminary); worked example") In this example the loan saves about 505 and finishes two months sooner, with a slightly lower payment. Your own numbers depend on the rates you're offered, so ask for a quote and run the same comparison. ## What costs do people miss? Fees, and the length of the loan. Some lenders charge an arrangement or origination fee, either upfront or taken out of the money you receive. If the fee comes out of the loan, you might get 5,700 for a 6,000 loan and still owe all 6,000. Check whether there's a charge for paying the loan off early, too. Length matters as much as rate. Spreading the same 6,000 over five years gives a lower monthly payment, which can feel like a win, but you'd pay interest for much longer. Compare the total paid, not the monthly figure. ## When is consolidation a bad idea? When the cause of the debt hasn't changed. If the cards were covering a monthly shortfall, clearing them only creates room for a new balance. Then you've got a loan and full cards. It's also a poor fit if: - The rate you're offered isn't much lower than your cards - You'd need to secure the loan against your home, which puts the house at risk if you can't pay - The debt's small enough to clear in a few months anyway Before applying, look at last month's card spending. If groceries and bills went on the card, start with the budget. [How to stop living paycheck to paycheck](https://wealtie.com/blog/stop-living-paycheck-to-paycheck) is the place to begin. ## What should you do with the cards afterwards? Stop using them for everyday spending. Some people keep one for emergencies and put the rest away, without closing the accounts straight away, since closing them can affect your credit record. Others find it easier to close them. Either way, take them out of your wallet and off your saved payment details. Set up the loan payment as an automatic one on the day after payday, so it's never the last thing to be paid. ## What are the alternatives? A few, depending on your situation: - A 0% balance transfer card, if you can clear the balance before the offer ends and the fee's lower than the interest you'd save - Paying the cards down in a set order, using [the debt snowball or avalanche](https://wealtie.com/blog/debt-snowball-vs-avalanche) - Asking your card provider for a lower rate, which sometimes works if you've paid on time - Free debt advice from a non-profit or government-backed service, if the total's more than you can manage If you've got savings beyond a small cushion, using them to clear the highest-rate card first is usually cheaper than any loan. [Pay off debt or save](https://wealtie.com/blog/pay-off-debt-or-save) goes through the numbers, and [paying your card in full](https://wealtie.com/blog/pay-your-credit-card-in-full) explains why the balance costs what it does. ## Does a consolidation loan hurt your credit? Usually only briefly. Applying normally involves a credit check, and a new account can lower your score for a while. Over time, paying the loan on time and keeping card balances low tends to help. Many lenders offer a soft check that shows likely rates without affecting your record, so use those to compare before you apply. Don't apply to several lenders in a row with full applications. Each one can leave a mark. ## How do you stay on track in Wealtie? Log the loan payment as a monthly expense and set it up as a recurring transaction, so it logs itself on the due date. Your [budget tracker](https://wealtie.com/features/budgets) then shows what's left after it, and Budget Health warns you mid-month if spending's heading over. Log card spending as you go in the [expense tracker](https://wealtie.com/expense-tracker), so you'll see straight away if a cleared card starts filling up again. ## Questions people ask ### Is it smart to consolidate credit card debt? Yes, if the loan's total cost, fees included, is lower than paying the cards off at the same speed, and you stop adding to the cards. Otherwise it can leave you with a loan and new card debt. ### What is the average personal loan rate? In the Fed's G.19 data, 24-month personal loans at commercial banks averaged 11.90% in the third quarter of 2026 (preliminary). The rate you're offered depends on your credit and the lender. ### Does debt consolidation hurt your credit score? Usually only briefly, because of the credit check and new account. On-time payments and low card balances afterwards tend to help. ### Should I close my credit cards after consolidating? Not necessarily. Stop using them for everyday spending and remove saved card details; closing accounts can affect your credit record, so check before you do. ## Sources 1. [Consumer Credit G.19, Terms of Credit](https://www.federalreserve.gov/releases/g19/current/) (Board of Governors of the Federal Reserve System, checked 9 November 2026) *This article is general information, not financial, tax or legal advice. Your situation is your own; check the numbers that apply to you before you act on them.*