How to Use a Personal Loan for Debt Consolidation

Debt can feel overwhelming, especially when juggling multiple credit card bills, student loans, or medical expenses. If you’re struggling to keep up with different due dates and interest rates, a personal loan for debt consolidation might be the solution you need. It simplifies your payments, potentially lowers your interest rate, and helps you regain financial control. But how does it work, and is it right for you? Let’s break it down in a friendly, straightforward way.

What is Debt Consolidation?

Debt consolidation means combining multiple debts into a single loan with one monthly payment. Instead of keeping track of various bills, you take out a personal loan to pay off those debts and then focus on repaying just one loan. Learning how to get a personal loan can help streamline this process, allowing you to secure better terms and manage payments more efficiently.

For example, if you owe money on three credit cards with different interest rates and due dates, you can use a personal loan to consolidate debt, simplifying your financial life.

How Do Debt Consolidation Loans Work?

Debt consolidation loans work by combining multiple debts into a single loan, normally with a lower interest rate or more favorable terms. Here’s a step-by-step breakdown of how they function:

1. Assess Your Debt: Gather details about your existing debts, including balances, interest rates, and monthly payments. Determine the total amount you owe and your ability to make monthly payments. Shop around for a debt consolidation loan from banks, credit unions, or online lenders.

2. Apply for a Consolidation Loan: Compare interest rates, fees, loan terms, and eligibility requirements. Submit an application, which may require a credit check and proof of income.

3. Receive Loan Funds: If approved, the lender will pay off the loan amount, which is generally used to pay off your existing debts. Some lenders may pay off your creditors directly, while others deposit the funds into your account for you to manage.

4. Pay Off Existing Debts: Use the loan funds to pay off your credit cards, personal loans, or other high-interest debts. This leaves you with only one loan to manage instead of multiple payments.

5. Repay the Consolidation Loan: Make fixed monthly payments on the new loan over a set term (e.g., 2–5 years). The goal is to save money on interest and simplify repayment.

Read – Emergency Loans For Bad Credit

Why Use a Personal Loan for Debt Consolidation?

Managing multiple debts can be overwhelming, but a personal loan for debt consolidation can simplify the process. By combining all your debts into one loan, you can enjoy lower interest rates, a single monthly payment, and a clear repayment timeline. A personal loan for debt consolidation has several advantages:

1. Lower Interest Rates

Credit cards typically have high interest rates, often ranging from 15% to 30%, making it difficult to pay off the balance quickly. Personal loans, on the other hand, usually come with lower fixed interest rates, reducing the overall cost of your debt. By consolidating your debt with a personal loan, you can save money in interest payments and pay off your balance more efficiently.

2. Single Monthly Payment

Juggling multiple credit card bills with different due dates can be overwhelming, increasing the chances of missing a payment. A personal loan combines all your outstanding debts into one, leaving you with a single monthly payment. This simplifies budgeting, reduces financial stress, and ensures timely payments, helping you avoid late fees and penalties.

3. Fixed Repayment Term

Unlike credit cards, which allow you to carry a balance indefinitely as long as you make the minimum payment, personal loans have a fixed repayment period—typically ranging from 12 to 60 months. This structured timeline provides a clear path to becoming debt-free, helping you plan your finances better and stay on track.

4. Boost Your Credit Score

High credit card balances negatively impact your credit utilization ratio, which is a key factor in your credit score. By paying off credit cards with a personal loan, you reduce your credit utilization, which can improve your credit score. Additionally, making consistent on-time payments on your personal loan demonstrates responsible credit management, further boosting your score.

5. Faster Debt Payoff

When you only make minimum payments on credit cards, a significant portion goes toward interest, prolonging the repayment period. A personal loan, with its structured repayment plan, ensures that more of your payment goes toward reducing the principal balance each month. As a result, you can pay off your debt faster than if you continued making minimum payments on your credit cards.

How to Use a Personal Loan for Debt Consolidation?

Debt consolidation can simplify your finances by combining multiple debts into a single loan with a fixed repayment plan. If you’re considering using a personal loan for this purpose, following the right steps can help you maximize its benefits and avoid financial pitfalls. Here’s a detailed guide to getting started:

1. Assess Your Debt

Before applying for a personal loan, take a close look at your current debts. Make a list that includes:

• Outstanding balances on credit cards, loans, or other obligations
• Interest rates on each debt
• Minimum monthly payments required

This assessment will help you determine how much you need to borrow and whether consolidating your debt with a personal loan makes financial sense. Ideally, your new loan should offer a lower interest rate than your existing debts to save you money in the long run.

2. Check Your Credit Score

Lenders evaluate your credit score to determine your eligibility and interest rate. A higher credit score can help you secure better loan terms, while a lower score may result in higher interest rates or loan denial.

• Check your credit score through a free credit report service.
• If your score is low, consider improving it by making timely payments and reducing your credit utilization before applying for a loan.

Taking steps to boost your credit score before applying can increase your chances of approval and help you secure a more favorable loan.

3. Compare Lenders and Loan Options

Not all personal loans are the same, so shopping around is crucial. Compare different lenders, including banks, credit unions, and online lenders, to find the best terms. Key factors to consider include:

• Interest rates: Look for the lowest possible rate to reduce overall costs.
• Loan terms: Choose a repayment period that balances affordability with quick debt payoff.
• Fees: Check for origination fees, prepayment penalties, or other hidden charges.
• Customer reviews: Read borrower feedback to gauge lender reliability and customer service.

Comparing multiple loan options ensures you choose the one that best fits your financial needs.

4. Apply for a Loan

Once you’ve selected a lender, gather the necessary documents, which typically include:

• Evidence of income (pay stubs, tax returns, or bank statements)
• Identification (driver’s license, passport, or Social Security number)
• Debt details (statements from your credit cards or other loans)

Submit your application online or in person and wait for approval. While some lenders review your application within a few days, others provide fast judgments.

5. Use the Loan to Pay Off Your Debt

If your loan is approved, the lender will either deposit the funds into your account or pay your creditors directly. Ensure you use the loan exclusively for debt consolidation and avoid spending it on non-essential expenses.

Paying off your credit cards and other debts in full will give you a fresh financial start, helping you focus on a single repayment plan.

6. Make On-Time Payments

Now that you have only one loan to manage, staying on top of payments is crucial.

• To prevent missing deadlines, set up automatic payments.
• Stick to your budget to ensure you always have enough funds for the monthly payment.
• To reduce interest costs and pay off the loan more quickly, think about making additional payments when you can. 

Timely payments not only keep your loan in good standing but also help improve your credit score.

7. Avoid Accumulating More Debt

The main goal of debt consolidation is to become debt-free, so it’s important to avoid falling back into the cycle of borrowing.

• Resist the temptation to use newly paid-off credit cards for unnecessary purchases.
• Stick to a budget and build an emergency fund to cover unexpected expenses.
• Use credit responsibly to maintain financial stability.

By staying disciplined and managing your finances wisely, you can make the most of your debt consolidation loan and work towards long-term financial freedom.

Are personal loans good for debt consolidation?

Debt consolidation using a personal loan can be a smart financial move, but it’s important to know the benefits and potential drawbacks before making a decision. While it can simplify payments and lower interest costs, it may also come with certain risks. Here are the pros and cons in a detailed form:

Pros of Using a Personal Loan for Debt Consolidation

1. Lower Interest Rates Than Credit Cards

Credit cards typically carry high interest rates, often ranging from 15% to 30%. Personal loans, on the other hand, usually offer lower interest rates, especially for borrowers with good credit. This means you’ll pay less in interest over time, helping you save money and pay off debt more efficiently.

2. Simplified Repayment Process

Managing multiple credit card payments with different due dates can be stressful. A personal loan consolidates all your debts into a single loan with just one monthly payment. This makes budgeting easier, reduces the chances of missed payments, and helps you stay on track toward debt freedom.

3. Fixed Loan Terms

Unlike credit cards, which have revolving balances and no set repayment schedule, personal loans come with fixed repayment terms. This means you’ll have a clear timeline for when you’ll be debt-free, whether it’s 2, 5, or 7 years. Knowing your exact payoff date can provide motivation and financial stability.

4. Potential Credit Score Improvement

Using a personal loan to pay off credit card debt can improve your credit score in several ways:

• Lower credit utilization ratio: Credit utilization (how much of your available credit you’re using) is a key factor in credit scores. Paying off credit cards reduces utilization and can boost your score.
• Diverse credit mix: Having different types of credit (such as installment loans and credit cards) can positively impact your credit profile.
• On-time payments: Consistently making loan payments on time can further strengthen your credit score.

5. Faster Debt Payoff

If you only make minimum payments on your credit cards, it can take years to clear the balance due to high interest rates. A personal loan with fixed monthly payments ensures a structured repayment plan, helping you eliminate debt faster and avoid prolonged financial burdens.

Cons of Using a Personal Loan for Debt Consolidation

1. May Require a Good Credit Score

To qualify for a personal loan with a low interest rate, you typically need a good credit score (usually 670 or higher). If your score is low, you may receive a higher interest rate, making the loan less beneficial compared to your current debts. Some borrowers may not qualify at all.

2. Some Lenders Charge Fees

While personal loans can save money on interest, some lenders charge additional fees, including:

• Origination fees: A percentage of the loan amount deducted upfront, usually between 1% to 6%.
• Prepayment penalties: If you pay off your loan early, certain lenders will charge you costs. 
• Late payment fees: Missing payments can lead to extra charges and potential damage to your credit score.

It’s important to read the loan terms carefully and choose a lender with minimal or no fees.

3. Can Be Risky If You Accumulate More Debt

One of the biggest risks of using a personal loan for debt consolidation is the possibility of falling into more debt. If you continue using credit cards after paying them off, you could end up with both a loan and new credit card balances, worsening your financial situation.

Establish and follow a budget to prevent this. Consider keeping your credit cards open for credit history purposes but using them only for essential purchases and paying off the balance in full each month.

Where can I find Debt Consolidation Loans?

You can find debt consolidation loans from a variety of lenders, including banks, credit unions, online lenders, and well-known financial institutions. Here’s a list of where to look and what to consider when choosing a lender:

Banks are one of the most traditional sources for debt consolidation loans. Established institutions like Wells Fargo, Chase, Bank of America, and Citibank offer a wide range of financial products, including personal loans that can be used for debt consolidation. One of the main benefits of borrowing from a bank is the potential for lower interest rates, especially if you already have a relationship with the bank, such as a checking or savings account. However, banks often have stricter credit requirements compared to other lenders, which can make it difficult for individuals with fair or poor credit to qualify.

Credit unions are another excellent option for debt consolidation loans. Examples include:

• Navy Federal Credit Union
• Alliant Credit Union
• PenFed Credit Union 

Credit unions are member-owned, non profit organizations that typically offer lower interest rates and fees compared to banks. They also tend to have more flexible lending criteria, making them a good choice for individuals with fair credit. However, to apply for a loan, you must become a member of the credit union, which often involves meeting specific eligibility requirements, such as living in a certain area or working for a particular employer. Moreover, credit unions may have fewer branches and less robust online services compared to larger banks, which could be a drawback for some borrowers.

Online lenders have become increasingly popular for debt consolidation loans due to their convenience and competitive rates. Examples of online lenders include:

• SoFi
• LendingClub 
• Prosper
• Upstart
• LightStream 

These lenders offer a fast and easy application process, often with quick approval and funding times. They are particularly attractive to borrowers with good credit, as they frequently offer competitive interest rates. Some online lenders also cater to individuals with fair or poor credit, although these loans may come with higher interest rates and fees. However, online lenders may charge origination fees or other costs, and the lack of in-person service can be a disadvantage for those who prefer a more personalized experience.

Peer-to-peer (P2P) lending platforms, such as LendingClub and Prosper, provide another avenue for obtaining a debt consolidation loan. These platforms connect borrowers directly with individual investors, often resulting in competitive rates for those with good credit. P2P loans typically offer flexible terms and quick funding, making them an attractive option for many borrowers. However, fees can be higher than those charged by traditional lenders, and P2P lending is not available in all states, which could limit accessibility for some individuals.

Specialized debt consolidation companies, like Freedom Debt Relief and National Debt Relief, focus specifically on helping borrowers consolidate and manage their debt. These companies may offer debt management plans or settlement options, which can be beneficial for those struggling with multiple debts. However, it’s important to be cautious when dealing with these companies, as some may charge high fees or use aggressive tactics. There is also a risk of encountering scams or unethical practices, so it’s important to thoroughly research and read reviews before committing to a specialized debt consolidation company.

Balance transfer credit cards are another option for consolidating debt, particularly credit card debt. Cards from issuers like Discover, Chase, Citi, or Bank of America often come with 0% introductory APR offers, which can save you a significant amount of interest if you pay off the balance during the promotional period. The application process for a balance transfer card is typically simpler than applying for a loan, and no loan is required. However, it’s important to be aware of the high interest rates that will apply after the promotional period ends, as well as the balance transfer fees, which are usually around 3%–5% of the transferred amount.

Home equity loans or home equity lines of credit (HELOCs) are secured loans that use your home as collateral. Lenders like Quicken Loans, Bank of America, and local banks or credit unions offer these products. The primary advantage of using a home equity loan or HELOC for debt consolidation is the lower interest rates, which are typically lower than those for unsecured loans because the loan is secured by your home. Furthermore, the interest on these loans may be tax-deductible, although you should consult a tax advisor to confirm this. However, the major downside is that your home is at risk if you default on the loan. These options also require that you have equity in your home and a good credit score to qualify.

How Do I Qualify for a Debt Consolidation Loan?

Qualifying for a debt consolidation loan depends on several factors, including your credit score, income, debt-to-income ratio, and overall financial health. Here’s a guide to help you understand the requirements and improve your chances of approval:

Major Factors Lenders Consider :

Credit Score:

Most lenders require a good to excellent credit score (typically 670 or higher) to qualify for the best interest rates. If your score is lower (e.g., 580–669), you may still qualify but may face higher interest rates or stricter terms. Some lenders specialize in loans for borrowers with poor credit, but these often come with higher costs.

Income and Employment History:

Lenders want to see that you have a stable income to repay the loan. You may need to provide proof of income, such as pay stubs, tax returns, or bank statements. Self-employed individuals may need to provide additional documentation, like profit-and-loss statements.

Debt-to-Income Ratio (DTI):

Your DTI compares your monthly debt payments to your gross monthly income. Most lenders prefer a DTI below 40%–50%. To calculate your DTI, add up all your monthly debt payments (e.g., credit cards, car loans, student loans) and divide by your gross monthly income.

Existing Debt:

Lenders will review your current debts to ensure you’re not overextended. They may also check your credit utilization ratio (the percentage of available credit you’re using), which should ideally be below 30%.

Collateral (for Secured Loans):

If you’re applying for a secured debt consolidation loan (e.g., a home equity loan), you’ll need to provide collateral, such as your home or car. Unsecured loans don’t require collateral but may have stricter credit and income requirements.

Credit History:

Lenders will review your credit report for late payments, defaults, bankruptcies, or other red flags. A clean credit history improves your chances of approval.

When to avoid debt consolidation loans?

Debt consolidation loans can be a helpful tool for managing debt, but they aren’t the right solution for everyone. Here are some situations when you should avoid debt consolidation loans and consider alternative ways:

1. You Can’t Afford the Monthly Payments

If the monthly payment on the consolidation loan is higher than what you’re currently paying across multiple debts, it could strain your budget.

What can you do instead? Look for ways to reduce expenses, increase income, or explore debt relief options like a debt management plan (DMP).

2.Your Credit Score Is Too Low

If your credit score is poor (typically below 580), you may only qualify for high-interest loans, which could cost you more in the long run.

What can you do instead? Work on improving your credit score before applying, or consider alternatives like credit counseling or debt settlement.

3. You’re Not Addressing the Root Cause of Your Debt

If you’re consolidating debt without changing the spending habits that led to the debt, you risk accumulating new debt on top of the consolidation loan.

What can you do instead? Create a budget, cut unnecessary expenses, and address the underlying issues (e.g., overspending, emergencies, or lack of savings).

4.The Loan Terms Are Worse Than Your Current Debt

If the consolidation loan has a higher interest rate, longer repayment term, or excessive fees, it may not save you money.

What can you do instead? Compare the total cost of the loan (including fees and interest) to your current debts. If it’s not a better deal, explore other options.

5. You’re Using Secured Debt to Pay Unsecured Debt

If you’re considering a secured loan (e.g., a home equity loan) to pay off unsecured debt (e.g., credit cards), you’re putting your assets at risk. If you default, you could lose your home or car.

What can you do instead? Stick to unsecured debt consolidation options or explore non-loan alternatives like a DMP.

6.You’re Already Struggling to Make Ends Meet

If you’re barely keeping up with your current payments, adding a new loan (even with lower payments) might not solve the problem.

What can you do instead? Seek help from a nonprofit credit counseling agency to explore debt relief options like debt settlement or bankruptcy.

7.You’re Tempted to Rack Up More Debt

If you plan to use a consolidation loan to pay off credit cards but continue using those cards, you’ll end up in a worse financial situation.

What can you do instead? Commit to not using credit cards until the consolidation loan is paid off, or consider closing the accounts.

8.You’re Close to Paying Off Your Debt

If you’re already making significant progress on paying off your debt, a consolidation loan may not be worth the effort or cost.

What can you do instead? Focus on paying off your existing debts as quickly as possible using strategies like the debt snowball or debt avalanche method.

9.You’re Dealing with Predatory Lenders

Some lenders target borrowers with poor credit and offer high-interest loans with hidden fees or unfavorable terms.

What can you do instead? Avoid lenders with poor reviews, high-pressure tactics, or unclear terms. Stick to reputable banks, credit unions, or online lenders.

10.Bankruptcy Might Be a Better Option

If your debt is overwhelming and you have no realistic way to repay it, a debt consolidation loan may only delay the inevitable.

What can you do instead? Consult a bankruptcy attorney to determine if filing for Chapter 7 or Chapter 13 bankruptcy is a better solution.

What are the Alternatives to Personal Loan Debt Consolidation?

A personal loan can be a great tool for consolidating debt, but it may not be the best option for everyone. Depending on your financial situation, credit score, and the amount of debt you owe, other strategies might be more effective. Here are some alternative ways to manage and pay off debt.

1. Balance Transfer Credit Card

A balance transfer credit card allows you to move your existing credit card debt to a new card with a 0% interest rate for a promotional period, usually ranging from 6 to 24 months.

How It Works:

• Apply for a credit card with a 0% introductory APR on balance transfers.
• Transfer high-interest credit card balances to the new card.
• Pay off the debt before the promotional period ends to avoid high interest rates.

Pros:

 An interest-free period helps you save money.
Can pay off debt faster without additional interest charges.
Simplifies payments by combining multiple debts onto one card.

Cons:

To get approved, a credit score of good to outstanding is necessary.

A balance transfer fee (typically 3%-5% of the transferred amount) may apply.
If you don’t pay off the balance before the promo period ends, high interest rates may kick in.

2. Debt Management Plan (DMP)

A structured repayment plan called a Debt Management Plan (DMP) is provided by nonprofit credit counseling organizations. These agencies negotiate with creditors on your behalf to reduce interest rates and create an affordable payment plan.

How It Works:

• A credit counselor reviews your financial situation.
• They negotiate lower interest rates with your creditors.
• You make a single monthly payment to the counseling agency, which then distributes it to your creditors.

Pros:

Reduces interest rates without needing a loan.
Provides professional financial guidance.
Helps you stay organized with a single monthly payment.

Cons:

 Some agencies charge fees for their services.
Requires closing credit card accounts, which may impact your credit score.
It takes several years to complete the program.

3. Home Equity Loan or HELOC (Home Equity Line of Credit)

If you own a home, you can use your home equity to consolidate debt through a home equity loan (lump sum) or a HELOC (a revolving credit line). These options often offer lower interest rates since they are secured by your home.

How It Works:

• Borrow against your home’s equity (the difference between your home’s value and mortgage balance).
• Use the loan or credit line to pay off high-interest debts.
• Repay the loan over a fixed term (home equity loan) or as needed (HELOC).

Pros:

Reduced interest rates compared to credit cards or personal loans.

Can consolidate large amounts of debt.
Fixed monthly payments (home equity loan) or flexible repayment (HELOC).

Cons:

Your home serves as collateral—risk of foreclosure if you fail to repay.
Requires sufficient home equity to qualify.
Closing costs and fees may apply.

4. Snowball or Avalanche Debt Repayment Methods

If you prefer to tackle debt without taking out a loan, you can use either the Snowball Method (paying off smaller debts first) or the Avalanche Method (focusing on high-interest debts first).

How the Snowball Method Works:

1. List your debts from smallest to largest.
2. For all except the lowest debts, make the minimal payment. 
3. Contribute more funds to the smallest debt until it is settled.
4. Repeat the process with the next smallest debt.

Motivational boosts as small debts disappear quickly. May pay more in interest over time if high-interest debts are left for later.

How the Avalanche Method Works:

1. Sort the interest rates on your debts from greatest to lowest.
2. Except for a requirement with the highest interest rate, pay the minimal amount due on all of your bills.
3. Put extra money toward the highest-interest debt.
4. Repeat until all debts are paid off.

Saves more money in interest over time. Can take longer to see progress, which may be discouraging.

FAQs : How To Use A Personal Loan For Debt Consolidation

1. Will a Personal Loan Hurt My Credit Score?

Yes, taking out a personal loan can initially impact your credit score, but the long-term effects can be positive if you manage it well.

Short-Term Impact:

• When you apply for a personal loan, lenders perform a hard inquiry on your credit report, which can lower your credit score slightly (by a few points).
• Opening a new loan increases your overall credit accounts, which can temporarily affect your average account age, another factor in your credit score.

Long-Term Benefits:

• Lower Credit Utilization: If you use the loan to pay off high-interest credit cards, your credit utilization ratio (the percentage of your available credit in use) decreases, which can boost your score.
• On-Time Payments: Making regular, timely payments on your personal loan shows financial responsibility and improves your payment history—the most significant factor in your credit score.

While your credit score might dip initially, responsible repayment can improve it over time.

2. Can I Get a Personal Loan for Debt Consolidation with Bad Credit?

Yes, but it may come with challenges such as higher interest rates and stricter approval requirements.

Options for Borrowers with Bad Credit:

• Higher Interest Rates: If your credit score is low, lenders may offer you a personal loan at a high interest rate, which might not make consolidation worthwhile.
• Secured Personal Loans: Some lenders offer secured personal loans where you put up collateral (like a car or savings account) to qualify for a lower rate.
• Co-Signer Option: Applying with a co-signer who has a strong credit history can improve your chances of approval and help you get better loan terms.
• Credit Improvement Before Applying: If possible, take time to improve your credit score by paying down existing debts and ensuring your payments are made on time.

It’s possible to get a personal loan with bad credit, but exploring other options or improving your credit first may help you secure better terms.

3. How Long Does It Take to Get a Personal Loan for Debt Consolidation?

The approval and funding time varies by lender, but here’s a general timeline:

Approval Process:

• Online Lenders: Typically the fastest option, with approval within minutes to hours, and funds deposited in 24-48 hours.
• Banks and Credit Unions: May take a few days to a week for approval and disbursement.
• Peer-to-Peer Lending Platforms: Can take longer, usually several days for approval and funding.

What Can Speed Up the Process?

• Having all required documents ready (proof of income, ID, debt details).
•  Applying with a lender that offers instant approval and same-day funding.

Online lenders are the fastest, while traditional banks may take longer to process your loan application.

4. What Happens If I Miss a Personal Loan Payment?

Missing a personal loan payment can have serious financial consequences, including late fees and a drop in your credit score.

Consequences of Missing a Payment:

• Late Fees: Most lenders charge a late payment fee if you miss the due date.
• Credit Score Impact: A missed payment can be reported to credit bureaus if it’s 30+ days late, lowering your score significantly.
• Higher Interest Rates: Some lenders apply penalty APRs, increasing the interest rate on your remaining balance.
• Default Risk: Consistently missing payments can lead to loan default, legal action, or debt collection.

How to Avoid Missing Payments:

• Set up automatic payments through your bank or lender.
• Use reminders or alerts for upcoming due dates.
• If struggling, contact your lender to discuss payment extensions or hardship programs before missing a payment.

Missing payments can hurt your credit and finances—always set up automatic payments or notify your lender if you anticipate difficulty making a payment.

5. Should I Close My Credit Cards After Debt Consolidation?

Not necessarily. Keeping them open can help maintain your credit utilization ratio, but there are risks involved.

Reasons to Keep Credit Cards Open:

• Credit Utilization Ratio: Closing a credit card reduces your total available credit, which can increase your credit utilization ratio and lower your score.
• Credit History Length: Keeping older accounts open helps maintain a longer credit history, which benefits your credit score.

When Closing a Credit Card Might Be a Good Idea:

• If you struggle with overspending and keeping the card open would tempt you into more debt.
• If the card has high annual fees and you no longer need it.

What You Can Do Instead:

• Keep the card open but use it sparingly (e.g., for small recurring payments).
• Set up an automatic payment to ensure it remains active without accumulating new debt.

Keeping credit cards open can help your credit score, but if they encourage overspending, closing them may be the better option.

Using a personal loan for debt consolidation can be a powerful financial tool when used wisely. It can help you simplify payments, lower interest rates, and provide a clear path to becoming debt-free. However, success depends on disciplined repayment and avoiding new debt accumulation.