When one can help
Consolidating card debt DOWN
Replacing 24% revolving debt with a 12% fixed loan, then leaving the cards empty, is a legitimate rescue. The trap is treating the freed cards as new money.
Fixed and finite is the feature
A 36-month loan ends. Cards are designed not to. Predictability itself has value for some borrowers.
Reading an offer honestly
APR, not monthly payment
Compare APRs including origination fees (1-8% deducted upfront is common). A '9.9%' loan with 5% origination is not a 9.9% loan.
Beware rates above card rates
Subprime personal loans at 30%+ are payday loans in business casual. If the APR beats your cards, decline.
No prepayment penalty
Standard for reputable lenders. Its absence lets a good month shorten the loan.
Never secured by your car or title
That's a title loan wearing a costume — see the payday-loans warning page.
Sources: CFPB — Personal loans