Why using a personal loan to pay off credit card debt can backfire

(InvestigateTV) — More Americans are trying to dig out of credit card debt by rolling balances into personal loans.

Americans owe $277 billion in personal loan debt as of the first quarter of 2026, up $1 billion from the previous quarter, according to a new analysis by LendingTree.

Ted Rossman, with the nonprofit credit counseling agency Money Management International, said a personal loan can help, but only if spending habits change alongside it.

“Unfortunately, a lot of people end up running the card balances right back up,” Rossman said. “And that’s really where we need to address the root behavior as well. Not to shame people for being in debt — nobody wants to be in debt — but you don’t want to try to borrow your way out of it, because that often doesn’t work.”

Rossman said moving in the right direction may require difficult steps, and people should not be afraid to ask for help.

“Sometimes that involves having to close the credit cards in question, but that’s so that we don’t go back there,” Rossman said. “Because what we’re seeing now is a lot of people are coming to us after trying the personal loan, and now they’ve run up even more debt than before.

Rossman said nonprofit credit counselors and formal debt management plans can offer significant support, particularly for people without good credit. These programs can help with managing debt, building a budget and negotiating repayment plans directly with creditors.