By Gabriel Gonçalves, personal finance writer · Published November 10, 2026 · Updated November 10, 2026

Key takeaways

• At banks, personal loans average 11.90% APR and credit cards that charge interest average 22.36%, according to the Federal Reserve (Q3 2026, preliminary).
• Loans cost less because they have a fixed end date, a fixed amount and a lender who checks your income before saying yes.
• That gap shrinks fast with fair or bad credit. Below a 670 score, a personal loan can cost about the same as a card, or more.
• Pre-qualifying doesn’t affect your credit score. A formal application usually does.

If your credit score is below 670, start here:

1. Pre-qualify before you apply. Checking your rate usually uses a soft inquiry, which the CFPB says won’t affect your credit score. Only submit a full application once you’ve seen a rate that beats your card.
2. Check a federal credit union. Federal credit unions can’t charge more than 18% APR on most loans through September 10, 2027, under a rule from the NCUA, their federal regulator. You’ll need to become a member first.
3. Call your card issuer. Ask about a lower APR or a hardship program before you take on a new loan.
4. Don’t apply everywhere at once. Each formal application can add a hard inquiry to your credit report.

Personal loans usually cost less than credit cards because they carry less risk for the lender.

You borrow a set amount, pay it back on a fixed schedule and you’re done.

A card lets you keep borrowing with no end date. Banks charge for that flexibility, which is why card APRs run roughly twice as high. But the average hides a catch: the lower your credit score, the smaller the gap gets.

The numbers: loans vs. cards

The Federal Reserve tracks what commercial banks charge on both products:

Source: Federal Reserve, G.19 Consumer Credit, released November 6, 2026. *Q3 2026 figures are preliminary and may be revised.

The gap has held at roughly 10 points for the past year.

Why personal loans cost less

1. A loan has an end date. A card doesn’t

A personal loan is paid off in a set number of months, usually somewhere between one and seven years.

The lender knows exactly when it gets its money back. A card balance can sit there indefinitely, and that uncertainty costs you.

2. The lender sets the amount once

With a loan, you get one lump sum and can’t add to it.

With a card, you can keep spending up to your limit, often right when money is tight.

That’s when borrowers are most likely to fall behind, and issuers price that risk into every card’s APR.

3. You get checked before you borrow

Personal loan lenders typically look at your income, your existing debt and your credit history before setting your rate.

A card issuer checks you once, when you apply, and then the balance can change for years.

4. Card rates are variable. Most loan rates are fixed.

Most card APRs follow the prime rate, which moves with the Fed. A fixed-rate personal loan locks your rate for the whole term, so you know your full cost on day one.

To see how slowly card rates react even when the Fed cuts, read The Fed Paused, but Your Card Rate Didn’t Drop.

The catch: it depends on your credit score

The Fed’s 11.90% is what banks charge their typical borrowers. Online lenders, who lend to a wider range of credit scores, price very differently by score:

Source: LendingTree, offers made through its marketplace in 2026 (loans of $5,000 to $54,999, 36- to 83-month terms). Accessed November 10, 2026.

NerdWallet’s pre-qualification data shows an even steeper climb: 29.32% for fair credit (630–689) and 50.79% for bad credit (under 630), according to NerdWallet (updated November 2, 2026).

So with good credit, a personal loan can cut your rate a lot. With fair or bad credit, it may barely beat your card, or cost more.

What the difference looks like on $5,000

Here’s the same $5,000 debt in two situations. In each table, the card is paid with the same monthly amount as the loan, so you can compare them side by side.

The loan rows assume you’re approved at the average rate for your credit tier. Your actual offer depends on your credit, income and the lender.

With good credit:

The loan saves about $1,440 and gets you out of debt nine months sooner.

With fair credit:

Examples to show the math. Card rates: Federal Reserve, Q3 2026 (22.36%) and WalletHub’s fair-credit average for new cards, accessed November 10, 2026 (27.01%). Loan rates: Federal Reserve, Q3 2026 (11.90%) and LendingTree’s fair tier (27.29%).

At fair-credit rates, the loan doesn’t save anything. Add a 5% fee and it costs about $430 more than the card.

Watch the fees, not just the rate

Many personal loans charge an origination fee of 1% to 10% of the loan, according to NerdWallet.

It usually comes out of the money you receive: borrow $10,000 with a 5% fee and $9,500 lands in your account.

Check the APR, which includes the fee, rather than the interest rate alone.

Learn more in Hidden Loan Fees: What Lenders Don’t Want You to Know and How APR Works and How Much of Your Payment Goes to Interest.

Run the numbers on your own debt

Averages only go so far. Here’s how to see whether a loan would actually save you money, using your own numbers:

1. Find your card’s APR and balance. Both are on your latest statement, usually in the “Interest charge calculation” box. Note what you paid in interest last month.
2. Pre-qualify with two or three lenders. Include at least one credit union. Write down each APR, the origination fee, the term and the monthly payment.
3. Work out the total cost of each loan. Multiply the monthly payment by the number of months, then subtract the amount you’re borrowing. That’s what the loan costs you in interest and fees.
4. Compare with your card at the same payment. Use a credit card payoff calculator with your card’s APR, your balance and the loan’s monthly payment. If the card costs more and takes longer, the loan wins.

If no offer beats your card by a clear margin, keep the card, pay as much as you can each month and work on your score first.

When a personal loan makes sense

A personal loan is worth it when:

• The APR is clearly below your card’s rate, fees included.
• You can afford the fixed monthly payment for the whole term.
• You stop adding to the card. Paying off a card with a loan and then running the card back up leaves you with two debts.
• You’ve shopped with soft inquiries first. Pre-qualification usually won’t affect your score. The formal application usually triggers a hard inquiry, which can lower it, so apply only to the lender you pick.

If your credit is fair or bad, these may get you further first: 5 Ways to Cut Credit Card Interest Without Earning More, Building a Loan-Ready Credit Profile and Improve Your Debt-to-Income Ratio. For a side-by-side look, see Debt Consolidation: Pros and Cons Guide and Credit card debt is draining you: why personal loans are taking over.

How we checked these numbers

Bank rates come from the Federal Reserve’s G.19 release of November 6, 2026.

Averages by credit score come from LendingTree and NerdWallet, which report what their users were actually offered, and the credit union rate cap comes from the NCUA.

We calculated every payoff example with standard loan amortization, at the rates and payments shown. All sources were checked on November 10, 2026.

This article is for informational purposes only and is not financial advice. Rates and terms vary by lender and borrower, and approval isn’t guaranteed. Check each lender’s official terms before you apply.

Sources

• Federal Reserve – G.19 Consumer Credit (November 6, 2026)
• NCUA – Board extends loan interest rate ceiling (February 6, 2026)
• CFPB – What is a credit inquiry?
• LendingTree – Personal loan rates by credit score
• NerdWallet – Average personal loan interest rates (November 2, 2026)
• WalletHub – Average credit card interest rates

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Written by

Gabriel Gonçalves