Personal Loan vs Credit Card Calculator

How to use

1. 01

   Enter the card balance and the card's APR. Take the rate from your statement rather than from the offer you were sent, because a purchase APR, a cash advance APR and a penalty APR can all be live on the same account.

2. 02

   Enter what you actually pay the card each month. This is the number the whole comparison pivots on: the card has no term, so its payoff date is created entirely by your payment, and a payment that barely clears the monthly interest produces a schedule measured in decades.

3. 03

   Enter the personal loan's interest rate — the rate on the note, not the APR the lender discloses. The tool adds the origination fee itself and charges interest on the grossed-up amount, so typing a fee-inclusive APR counts the fee twice.

4. 04

   Check the term and the origination fee. These two keep their values when the page opens, at 36 months and 3%, because they describe the shape of a loan offer rather than anything about you. Change both to match the offer in front of you.

5. 05

   Read the two total-repaid figures against each other, then read the two payments. The loan usually wins on total cost and loses on flexibility, and the difference between the payments is what tells you whether the loan is affordable in the months you would rather pay the card less.

Formula

Two routes out of the same balance, each costed to the end. The card is open-ended, so its schedule comes from your payment. With r = card APR / 100 / 12: months to clear = ceiling of [ -ln(1 - balance x r / payment) / ln(1 + r) ] Total interest is simulated rather than formulated: the engine adds balance x r, subtracts the payment, and sums every charge until the balance reaches zero. Card, total repaid = balance + that interest. The never-clears floor: if the payment is at or below balance x r it does not cover the first month's interest. The tool then reports the card total as 'Never clears' and the payoff time as 'Never', and the headline saving becomes an em dash rather than a number — because you cannot compute the saving against an infinite total. The loan is closed-end, so its schedule comes from the term. Origination fee = balance x (origination % / 100). Amount financed = balance + fee. The fee is borrowed, not paid separately, which is why you take out more than you owe. With r = loan APR / 100 / 12 and n the term in months: Loan payment = amount financed x r / (1 - (1 + r) ^ -n) Loan, total repaid = loan payment x n. Loan interest = total repaid - amount financed. The saving = card total repaid - loan total repaid, reported as whichever side is ahead. The asymmetry worth understanding before reading the answer: the loan's cost is fixed by its term the moment you sign, and the card's cost is fixed by a payment you can change every month. The comparison is therefore between a promise and a habit, and the tool can only price the promise honestly.

Example

Inputs: a $9,000 balance at 23.99%, $300 a month going to the card, a personal loan at 12.5% over 36 months, and a 3% origination fee. Step 1 - The card's floor. 23.99% / 12 = 1.99917% a month. On $9,000 that is $179.93 of interest in month one — $179.925 before rounding — so a $300 payment puts just over $120 against the principal. The loan finishes; it will simply take a while. Step 2 - The card's schedule. At $300 a month the balance clears in 47 months — 3y 11m — and $4,878 of interest accrues on the way, so the card costs $13,878 in total. Step 3 - The loan's principal. $9,000 x 3% = $270 of origination fee. You borrow $9,270 to clear $9,000, and the tool says so: the fee is usually taken out of the money you receive, so a $9,270 loan that nets you $9,000 is the normal shape of the deal. Step 4 - The loan's payment and total. Amortizing $9,270 over 36 months at 12.5% gives $310 a month, $11,164 repaid, of which $1,894 is interest. Step 5 - The verdict. $13,878 - $11,164 = $2,714, and that is exactly what the tool reports the loan saving. The two figures reconcile without rounding slack, which is worth noticing because it means you can check this one by hand. Read the shape of it rather than just the number. The loan costs $10 a month more than you were already paying the card, finishes eleven months sooner, and saves $2,714. It is not saving you money because 12.5% is a kind rate. It is saving you money because a 36-month term forces a payment that retires principal, where $300 against a 23.99% card spends the first $179.93 of every payment standing still. Which is why the comparison narrows as the card payment rises. Leave everything else and pay the card $450 instead: it now clears in 2y 2m for $11,607 total, and the loan's advantage collapses from $2,714 to $443. Pay it faster still and the card wins, because you stop paying the origination fee for a discipline you already had. And the case that makes the loan structural rather than optional. Drop the card payment to $175, just under the $179.93 of monthly interest. The card total now reads 'Never clears', the payoff time reads 'Never', and the headline saving is an em dash — there is no finite number to subtract from. The tool stops comparing and says the thing worth saying: at $175 a month the card balance never clears, interest alone outruns the payment, and the loan is not an optimization here, it is the way out. The loan's $310 payment is $135 more a month than you are paying now, and it ends in three years rather than never. One caution the arithmetic cannot carry. Even at 22% the loan still wins on the defaults — $354 a month, $12,745 repaid, $1,133 saved — because the term is doing the work rather than the rate. That is a real result and also a trap: a high-rate consolidation loan looks good on this page and still leaves you with an expensive loan and an empty card. The tool's last line is the one to take seriously. A loan only helps if the card then stays at zero.

Definitions

APR

The cost of credit as a yearly rate, the term 12 CFR 1026.18(e) requires a closed-end lender to use. On a personal loan the disclosed APR already includes the origination fee, because 12 CFR 1026.4(b)(3) makes points, loan fees and similar charges part of the finance charge. Enter the note rate on this page, not that APR, or the fee is counted twice.

Origination fee

A one-time charge for making the loan, commonly 1% to 8% of the amount borrowed and usually deducted from the proceeds. 12 CFR 1026.18(b)(3) subtracts it from the amount financed for that reason: you are disclosed as receiving the net, while owing the gross.

Amount financed

What the loan is actually written for. Here it is the balance plus the origination fee, because a fee taken from the proceeds has to be borrowed to leave you enough to clear the card.

Amortization

Repaying a fixed sum over a fixed term in level payments, with the interest share falling and the principal share rising each month. It is what gives the loan a certain end date and what the card, having no term, cannot offer.

Revolving credit

An account you can draw on again as you repay it, with a minimum payment rather than a schedule. A card is revolving; a personal loan is not. That difference is the real subject of this page — the rates are secondary.

Total repaid

Principal plus every dollar of interest and fees, on each route. It is the only figure that compares the two fairly, because a lower monthly payment across a longer stretch can cost far more than a higher one that ends.

Prepayment

Paying a loan off ahead of schedule. Most US personal lenders do not charge a prepayment penalty, but it is a term to read rather than assume, because a loan you cannot overpay without cost has less flexibility than the card it replaced.

Frequently asked questions