Personal Loans For Credit Card Debt 3/5/26

Summary

Podcast Summary: Your Money Minute

Episode: Personal Loans For Credit Card Debt
Air Date: March 5, 2026
Host: CNBC’s Jessica Ettinger
Guests/Experts: Joe Kernan, Sharon Epperson

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Episode Overview

In this concise episode of Your Money Minute, host Jessica Ettinger explores the growing trend of Americans turning to personal loans to pay off record levels of credit card debt. With insights from CNBC colleagues Joe Kernan and Sharon Epperson, the episode unpacks current consumer debt trends, what’s driving personal loan use, and why personal loans may not be the perfect escape from high-interest credit card debt.

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Key Discussion Points & Insights

1. Credit Card Debt Hits Record High

• Main Point: U.S. households are experiencing historic peaks in credit card debt.

  • Quote: "U.S. credit card balances reached a record 1.28 trillion at the end of 2025. That's according to the New York Fed."
    — Joe Kernan (00:12)

• Context: Despite rising household debt, consumer spending continues to be strong.

2. Personal Loans On The Rise

• Trend: Consumers are increasingly turning to personal loans as a way to consolidate and manage credit card debt.

  • Quote: "Personal loans will be the primary driver of consumer credit growth in 2026, with loan originations outpacing the growth in the number of new mortgages through refinancing or purchasing and credit cards."
    — Sharon Epperson (00:41)

• Source: Data from TransUnion indicates a significant shift in borrowing habits.

3. Interest Rates – No Magic Bullet

• High Interest Persists: Many borrowers are finding that personal loans don’t offer significant savings over credit card rates, particularly for those with subprime credit.

  • Quote: "The rates there are not that much lower than the credit card rates that they're paying. You know, even though the average personal loan rate is 12%, if you're talking about a subprime borrower, they're probably paying above 20% for sure for a personal loan."
    — Sharon Epperson (00:59)

• Key Insight: Swapping one kind of high interest debt for another may not improve the financial picture for many consumers.

4. Behavioral Traps – The Debt Cycle

• Warning: Paying off credit cards with a personal loan doesn’t solve underlying spending habits.

  • Quote: "And yes, the old credit card debt gets paid off, but it kind of doesn't matter when that person just starts spending again."
    — Jessica Ettinger (01:14)

• Advice: Maintaining discipline is crucial — avoid accruing new debt on cleared cards.

5. Solutions & Support

• Resource Highlight: Nonprofit credit counseling agencies offer free help to break the debt cycle.
  • Quote: "People need to understand that there is free help available with nonprofit credit counseling agencies that can help people figure out how to get out of this cycle."
    — Sharon Epperson (01:23)

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Notable Quotes & Timestamps

• "U.S. credit card balances reached a record 1.28 trillion at the end of 2025. That's according to the New York Fed."
  Joe Kernan – 00:12

• "Personal loans will be the primary driver of consumer credit growth in 2026..."
  Sharon Epperson – 00:41

• "Even though the average personal loan rate is 12%, if you're talking about a subprime borrower, they're probably paying above 20% for sure for a personal loan."
  Sharon Epperson – 00:59

• "It kind of doesn't matter when that person just starts spending again."
  Jessica Ettinger – 01:14

• "There is free help available with nonprofit credit counseling agencies that can help people figure out how to get out of this cycle."
  Sharon Epperson – 01:23

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Summary Takeaways

• Americans are facing the highest credit card debt in history, now at $1.28 trillion.
• More people are turning to personal loans to pay off credit cards, but these loans increasingly come with high interest rates—often not much lower than credit cards themselves.
• Subprime borrowers may face rates above 20% on personal loans, minimizing the financial benefit of debt consolidation.
• The strategy of paying off credit cards with loans may fail if spending habits remain unchecked.
• Free nonprofit credit counseling resources exist to help break the debt cycle and create lasting financial change.

For more details and resources, listeners are encouraged to visit cnbc.com.

Transcript

[Jessica Ettinger]

With a CNBC your Money minute, I'm Jessica Ettinger. Have you ever taken out a personal loan? More and more people are, as Americans are the deepest in credit card debt they've ever been.

[Joe Kernan]

Consumer spending has remained strong even as overall household debt levels have risen. U.S. credit card balances reached a record 1.28 trillion at the end of 2025. That's according to the New York Fed.

[Jessica Ettinger]

That's CNBC's Joe Kernan with the data. Now with the most credit card debt in U.S. history, CNBC's Sharon Epperson says people are trying to dig out by taking those personal loans. She has data from credit reporting agency TransUnion.

[Sharon Epperson]

Personal loans will be the primary driver of consumer credit growth in 2026, with loan originations outpacing the growth in the number of new mortgages through refinancing or purchasing and and credit cards.

[Jessica Ettinger]

But Epperson notes that many people are still paying pretty high interest on those personal loans.

[Sharon Epperson]

The rates there are not that much lower than the credit card rates that they're paying. You know, even though the average personal loan rate is 12%, if you're talking about a subprime borrower, they're probably paying above 20% for sure for a personal loan.

[Jessica Ettinger]

20% interest on a personal loan. And yes, the old credit card debt gets paid off, but it kind of doesn't matter when that person just starts spending again.

[Sharon Epperson]

Once you have that personal loan and you're paying off the credit card, you don't use that credit card anymore. That's the issue. People need to understand that there is free help available with nonprofit credit counseling agencies that can help people figure out how to get out of this cycle.

[Jessica Ettinger]

There's a lot more on this. @cnbc.com I'm Jessica Edinger, CNBC.

[Joe Kernan]

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