While Climb offers credit cards with reasonable interest rates, some big bank credit cards have interest rates well beyond 20%. Debt on these high-interest credit cards can be one of the biggest roadblocks to financial progress, especially when you’re only able to make the minimum payment.
For many people, a personal loan used for debt consolidation can be a powerful way to simplify payments and save a significant amount of money over time.
Why High-Interest Debt Is So Costly
When you have a 20%+ interest rate on a balance, a large portion of each payment goes toward interest instead of the balance itself.
That means:
- Your balance shrinks slowly
- You stay in debt longer
- You pay far more than what you originally borrowed
Even responsible borrowers can end up stuck paying for the same purchases for years.
What Debt Consolidation Does
Debt consolidation combines high-interest debts into one personal loan with:
- A single monthly payment
- A fixed payoff timeline
- Typically, a much lower interest rate
Instead of juggling several balances and due dates, you focus on one clear plan.
A Real Example: How Consolidation Saves Money
Let’s say someone has $10,000 in credit card debt spread across a few cards with an average interest rate of 22%.
If they only make the typical minimum payments:
- It could take over 20 years to pay off
- Total interest paid: about $15,000
- Total cost: about $25,000
Now let’s say they consolidate that $10,000 into a personal loan at 10% interest with a 5-year term.
With the personal loan:
- Fixed payoff time: 5 years
- Total interest paid: about $2,700
- Total cost: about $12,700
That’s a savings of more than $12,000 in interest alone. Same debt, completely different outcome.
The Middle Ground
Not all credit cards have high interest rates. At Climb, we offer credit cards with interest rates significantly more comparable to a personal loan than some credit cards, so you can keep the flexibility of a credit card without the crippling high interest rates!
Convenience is Key
Saving money is huge, but convenience matters, too.
A personal loan can help by:
- Replacing multiple due dates with one
- Locking in a predictable payment
- Removing the temptation to keep adding to credit card balances
That clarity makes it easier to stay on track and actually finish paying off your debt.
When a Personal Loan Makes Sense
Debt consolidation with a personal loan may be a smart option if:
- You’re carrying balances on high-interest credit card
- You want a clear, structured payoff plan
- You’re committed to not running balances back up
It’s not about taking on more debt, it’s about using better debt to eliminate worse debt.
Conclusion
Balances on high-interest credit cards don’t just cost money, they cost time and peace of mind.
A personal loan can help you take control by lowering interest, simplifying payments, and putting an end date on your debt. In many cases, the savings can add up to thousands of dollars over the life of the loan. If you’re looking for a smarter way forward, understanding your options is the first step and the right consolidation strategy can make a bigger difference than you might expect.
Use a personal loan for credit card debt!
Credit card debt can be very expensive, with some interest rates nearing 30%. Climb Credit Union offers low-interest loans that you can use to consolidate all of your credit card debt into one place, all while getting a better rate in the process!
Learn more at climbcu.org/personal-loans
Membership Eligibility Required. Not all applicants will be approved. Not all will qualify for lowest rates. 30% via CNBC 2023.
