Americans now owe $277 billion in personal loan debt, up a billion dollars from the previous quarter, according to LendingTree. A growing share of that money is going toward consolidating credit card balances, which sounds smart on paper: swap a high interest rate for a lower one and pay it off in one monthly payment.
The problem is what happens next. Ted Rossman, a credit counseling expert at Money Management International, says consolidation only works if your spending habits change at the same time. When they don’t, people pay the cards off with the loan and then slowly run the balances back up, ending up with a loan payment and new card debt at the same time.
Rossman’s advice for anyone stuck in that cycle: talk to a legitimate nonprofit credit counselor, look into a debt management plan where an expert negotiates with your creditors, and in some cases close the cards outright so you can’t fall back into the same trap. If you’re weighing a personal loan right now, what would actually change about your spending once the cards hit zero?
