Debt payoff comparison
Personal Loan vs. Balance Transfer: Which Fits Your Credit Card Debt?
Both can cut the interest you pay on credit card debt. They work differently, and the better fit depends on how much you owe, how fast you can pay, and what you qualify for.
How each one works
Balance-transfer card: You move card debt to a new card with a low or 0% intro APR for a set period, often 12 to 21 months. You usually pay a one-time fee, often 3% to 5% of the amount moved. Whatever you haven't paid off when the promo ends starts accruing interest at the card's regular, usually high, APR. See our balance transfer guide for details.
Personal loan (debt consolidation loan): You borrow a lump sum, use it to pay off the cards, and repay the loan in fixed monthly payments over a fixed term, commonly two to seven years. Most personal loans have a fixed rate. Some lenders charge an origination fee, often a percentage of the loan, that may come out of the money you receive.
Side by side
| 0% balance transfer | Personal loan | |
|---|---|---|
| Interest | 0% (or low) during the promo, then the regular card APR | Usually fixed for the whole loan |
| Up-front cost | Transfer fee, often 3%–5% | Origination fee on some loans, none on others |
| Payment | Low minimum, so you set your own payoff pace | Fixed payment with a set end date |
| Time to pay | Best if you can finish within the promo | Spreads payments over years |
| Typical approval | Strong credit usually needed for the longest promos | Available across more credit ranges, with rates rising as credit falls |
| Main risk | Balance left when the promo ends; new purchases | Higher total interest than a promo you could have paid off; cards filling back up |
A worked example
Suppose you owe $6,800 on cards at 24.5%. Two illustrative options:
- Balance transfer: 0% for 18 months with a 3% fee. Paying about $389 a month clears it within the promo. Total cost is about $204, the fee.
- Personal loan: 3 years at an example 14% APR with a 5% origination fee taken from the proceeds. To net $6,800, you'd borrow about $7,160, pay about $245 a month, and pay about $2,000 more than you borrowed in interest and fees.
If you can afford about $389 a month and qualify for the card, the transfer costs much less here. If you can only afford about $245 a month, the transfer would leave around $2,600 owing when the promo ends. The loan's fixed payment and end date may then be the steadier route. The rates here are examples. Real offers vary widely by credit and lender.
Questions that usually decide it
- Can you realistically pay it off within a promo period? If yes, a transfer often costs less. If no, compare the leftover balance's cost against a loan.
- What do you actually qualify for? Prequalification with a soft check, offered by many lenders and some card issuers, shows likely terms without affecting your score.
- Do you want a fixed end date? Some people do better with a fixed payment that forces progress.
- How much do you owe? A card's credit limit may not cover a large balance. Loans can be larger.
- Will the cards stay paid off? Either option fails if the old cards fill back up.
Other options
If neither works, a nonprofit credit counseling agency may be able to set up a debt management plan, which can lower card interest rates through agreements with issuers. You can also call your current card issuer and ask about a lower rate or a hardship program. Be cautious of companies that charge large up-front fees or promise to settle debts for less, and read the CFPB's credit card resources before signing anything.
To compare both with your own cards, use the debt consolidation calculator. It puts your current card payments, a personal loan (APR, term, and origination fee), and a 0% transfer side by side. The balance transfer calculator shows the payment needed to clear a balance inside a promo. For more on the loan route, read using a personal loan to consolidate credit card debt.
Run your own numbers
The free balance transfer calculator uses the inputs you choose and standard formulas. No sign-up, no credit check.
Open the balance transfer calculator