Vacation debt built up? How a personal loan could be your ticket to making it less expensive

Woman hanging Christmas stocking above fireplace.

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The less interest you are charged on your debt, the less you will have to spend.


Key points

  • A personal loan allows you to borrow money for any purpose.
  • If you have outstanding vacation debt, you may want to use a personal loan to pay it off.
  • If you have good credit, it will be easier for you to qualify for a loan with a low interest rate, saving you money on debt repayments.

If you’re closing out the 2022 holiday season with a pile of credit card debt, try not to beat yourself up. This has been a very difficult year to cover the extra expenses due to inflation. And so if your holiday shopping has pushed you over the edge and forced you to take on credit card debt, rather than feel guilty about it, focus instead on paying down that debt as easily as possible. And in this regard, a personal loan is an option to consider.

A solution that might work well for you

A personal loan allows you to borrow money for any purpose, whether it’s to fix up your home, take a vacation, or even start a business. It’s also not uncommon for people to use personal loans as a means of consolidating debt.

In fact, what makes personal loans a great option for credit card debt consolidation is that they tend to come with competitive interest rates. Of course, these days, the cost of borrowing has increased across the board due to recent interest rate hikes by the Federal Reserve. However, you may find that a personal loan charges much less interest than your credit cards charge. And so if you take out a personal loan and use your proceeds to pay off your cards, you could save a lot of money overall.

Find out: These personal loans are best for debt consolidation

Other: Pre-qualify for a personal loan without impacting your credit score

Also, when you carry around a credit card balance, there is a chance that the interest rate you are charged will increase over time. Personal loans don’t work that way. Rather, when you sign your loan papers, you are given an interest rate that will be set over the life of your loan. So, if you take out a $5,000 personal loan with 7% interest, that’s the rate you’ll be looking at until your loan is paid off (assuming you don’t refinance it).

How to get a personal loan

Personal loans are unsecured, meaning they are not secured by a specific asset. And that can make qualifying for one a little tricky.

When you take out an auto loan, for example, your lender has the right to repossess your vehicle if you don’t keep up with your payments. With a personal loan, there’s really no specific asset your lender can pursue if you fall behind on your payments, so there’s more risk.

For this reason, you will generally need decent credit to qualify for a personal loan. And if you have poor credit, you should expect to be stuck with a higher interest rate on a personal loan, as your lender will assume you’re taking on more risk.

In fact, if your credit score has really taken a hit this year, then you might want to put off applying for a personal loan, because it might not be much cheaper than just paying off your credit cards. But if your credit score and in good shape, then a personal loan could be your ticket to paying off your outstanding holiday debt as quickly and painlessly as possible.

Our picks for the best personal loans

Our team of independent experts carefully reviewed the fine print to find hand-picked personal loans that offer competitive rates and low fees. Start by reviewing our picks for the best personal loans.

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