If you have outstanding credit card debt, wish to lower your interest rates and simplify your monthly repayment obligations, you may consider taking out a personal loan. While personal loans have become a popular tool for consolidating credit card debt in recent days, know that personal loans do not always work the magic consumers expect them to.

Per the sound advice of Money Under 30, getting out of credit card debt requires more a change of mindset than anything else. If you are not careful, a personal loan will only add to your debt load and contribute to your habit of overspending. To prevent this outcome, the publication urges you to make several considerations before switching from credit cards to a bank loan.

You have your spending under control

For people with a bad spending habit, freeing up credit by consolidating it with a personal loan is a recipe for disaster. If the only thing preventing you from using your credit cards is the fact that you maxed them out, a personal loan may only feed your spending habit and push you further into debt. To avoid adding to your mountain of debt, only use a personal loan if you truly have your spending under control. Be honest with yourself regarding this point, otherwise, you risk making your situation worse.

You have a repayment plan

If you decide you have the discipline to avoid charging further items to your newly cleared cards, you then need to determine if you have the means to pay off the loan in the next five years. Will you be able to afford the new monthly payments? If you cannot, and if you anticipate struggling from month to month, it may be futile to take out a personal loan. Your inability to make monthly payments may convince you to rely on your balance-free credit cards.

You qualify for low rates

Most people who struggle to pay down credit card debt also have poor credit scores. If you can relate to this, it may not be any cheaper, interest wise, to consolidate it with a personal loan. To get the best rates on these types of loans, you typically need a 760. If you somehow managed to maintain a good score by paying at least the monthly minimum on-time, however, then your score may land you a single-digit interest rate.