These days, keeping your finances on track can feel like a constant juggling act. With rising costs, fluctuating interest rates and the unpredictability of the job market, it’s no surprise that people are exploring personal loans as a practical option.
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While borrowing money isn’t something to take lightly, under the right circumstances, a personal loan can offer stability, flexibility and even long-term savings. GOBankingRates spoke with Andrew Lokenauth, money expert and owner of Fluent in Finance, to discuss some reasons taking out a personal loan might make sense in today’s economy.
From his experience as a financial advisor, Lokenauth has noticed several compelling reasons personal loans are becoming a smart move in today’s economic climate.
One of the biggest perks? Interest rates on personal loans tend to be lower than those of credit cards. Per LendingTree, interest rates for personal loans in June 2025 start at just 6.49%, while the average credit card APR, LendingTree reported, is 24.33%. However, the rate for a personal loan will depend upon some factors, like your credit score.
Learn More: 10 Key Questions To Ask Before Taking Out a Personal Loan
Debt consolidation is probably the most strategic use of personal loans right now. According to LendingTree, 48.7% or borrowers take out a personal loan in order to consolidate their debt or refinance credit cards.
Lokenauth has helped clients combine multiple high-interest debts into a single, lower-interest payment. “One of my clients saved about $300 monthly just by consolidating their credit card debt into a personal loan with a 10% rate,” he said.
Fixed interest rates are another huge benefit in this uncertain economy. With inflation still running hot, locking in a fixed rate means your payments won’t increase.
According to Lokenauth, that predictability is super valuable when everything else seems to be getting more expensive. There are, however, some variable rate personal loans out there, which come with “additional risks,” per Debt.org. So be sure to know what type of loan you’re getting before you commit.
“Home improvements can be a smart use of personal loans right now,” Lokenauth said. Property values are still relatively high in most areas, so strategic renovations could boost your home’s value.
