When interest rates rise, many borrowers assume it’s the wrong time to consolidate debt. In reality, it’s one of the smartest times to do it—if you do it strategically.

The current landscape

According to the Federal Reserve’s recent consumer credit report, the average credit card APR hit 21.6%, the highest in over 30 years. Personal loan rates also climbed—but not nearly as fast. The gap between unsecured personal loans and revolving credit cards is now 8–10 percentage points on average.

Why consolidation still wins

Even in higher-rate environments, consolidation locks in a fixed rate and predictable payment. That stability protects borrowers from the variable APR hikes that credit card companies push during inflation cycles.

Example scenario

If you carry $25,000 across five cards at 21% APR, you’re paying roughly $440/month in interest alone. A consolidation loan at 13% APR cuts that to around $270/month, even before considering principal reduction.

That’s $2,000 in annual savings, plus faster progress toward zero balance.

Future-proofing your finances

The smartest borrowers in rising-rate markets aren’t chasing the lowest possible rate—they’re locking in control. Predictability is protection.

Consolidation in a rising-rate environment isn’t a panic move; it’s a power move.