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Balance Transfer vs. Personal Loan: Which Should I Choose?

Updated
Ryan Wilcox
Author: Ryan Wilcox
Ryan Wilcox
Ryan Wilcox

Ryan is a full-time Personal Finance Writer at Motley Fool Money. He’s been covering topics like credit cards and savings since 2022, when he began his writing career at The Points Guy. He later joined Motley Fool Money, where he continues helping people who are new to the world of personal finance. Outside of work, you’ll find Ryan reading, writing, listening to music or obsessively updating his Letterboxd account.

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Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures that our product ratings are not influenced by compensation.

If you're struggling with a mountain of credit card debt, you're not alone -- Americans owed a total of $1.18 trillion in credit card debt in the first quarter of 2025, according to Motley Fool Money research.

And I get it -- high-interest rates can make it feel impossible to get ahead. I've only started building my credit history over the last few years, so I've had to learn the hard way how interest adds up fast, and how easy it is to fall behind.

I've also spent years writing about two of the best ways to chip away at debt: balance transfer credit cards and personal loans. Both are smart ways to pay off your balance faster and save on interest, but they work very differently.

I'll walk you through what to know so you can make the right choice.

What is a balance transfer?

A balance transfer allows you to move debt from one credit card to another, usually a card with a limited-time, 0% introductory APR (often 12 to 21 months). This gives you a window to pay off your balance without interest, potentially saving hundreds or even thousands of dollars.

A balance transfer can be life changing for people drowning in credit card debt. It gives you the one thing you need the most: breathing room. You can avoid interest entirely if you pay off your debt during the intro period.

You're essentially giving yourself a do-over on your credit card debt. You can also complete the transfer quickly online, and because it's a credit card, you don't need to offer any collateral.

However, balance transfers usually come with fees -- typically around 3% to 5% of the amount you move. And once the 0% intro APR ends, the interest rate can rise sharply.

Balance transfer cards also tend to require good to excellent credit, so not everyone will qualify. If you've got the credit score to qualify, and you can pay off your debt within the promo window, this is the best way to pay down your credit card debt, hands down.

See our full list of the best balance transfer cards available now to start saving today.

What is a personal loan?

If you don't qualify for a balance transfer card, a personal loan is your next best option. It's a lump sum of money you borrow and repay in fixed monthly installments, usually over a few years. Unlike a credit card, it comes with a set payoff schedule and interest rate from day one.

That stability is one of the primary benefits of personal loans: you'll know exactly what your monthly payments will be and when your debt will be fully paid off. And if you have good credit, you might qualify for a relatively low interest rate, much nicer than a typical credit card APR.

Personal loans are also great because they can be used for all sorts of other purposes. I'm considering applying for a personal loan myself -- not to pay off debt, but to fund some large purchases -- and I like the idea of the versatility it provides.

On the downside, you'll likely have to deal with an origination fee, which can be up to 10% of your loan amount. And if your credit score isn't the best, your interest rate may not be competitive. Also, unlike a balance transfer, interest starts accruing right away.

Want a predictable payment schedule and fixed interest rate? Compare our favorite debt consolidation loans today to get started.

Balance transfer vs. personal loan: Which is right for you?

You can start by asking yourself a few key questions:

1. What kind of debt do I have?

  • If it's all credit card debt, a balance transfer card will probably be better. Just be sure your card's credit limit can cover all of the debt you're looking to move.
  • If it's different kinds of debt, like credit cards, medical bills and more, personal loans can combine them all into one fixed-rate payment that's easier to manage.

2. How long will it take me to pay off the debt?

  • Can you pay off your debt in 12 to 21 months? A balance transfer could save you on interest, as long as you pay it off on time.
  • Need more time? A personal loan is more predictable and can be easier to manage.

3. What's my credit score?

  • 670 or higher? You'll likely qualify for both top balance transfer offers and low-rate personal loans.
  • Below 670? A personal loan may be more accessible -- but compare offers carefully.

4. Am I disciplined with credit?

  • If you tend to carry balances or spend impulsively, a personal loan's fixed structure can help you stay on track.
  • With balance transfers, it's easy to rack up new debt on your old card if you're not careful.

When to combine the two

In some cases, using both a balance transfer and a personal loan can work well.

For example, you might transfer a portion of your debt to a 0% intro APR card and take out a personal loan to cover the rest. This could help you minimize interest while still locking in a predictable repayment plan.

One of our favorite balance transfer cards, the Wells Fargo Reflect® Card (rates and fees), offers 0% intro APR for 21 months from account opening on qualifying balance transfers and purchases. That's nearly two full years of paying down debt without having to worry about piling on interest.

Choose wisely and save more on interest today

If you have good credit and can repay what you owe within a year or two, I recommend a balance transfer as a cheaper, faster option to pay off debt. If you need more time or structure, though, I'd say to go with a personal loan for fixed payments and additional flexibility.

In either case, you'll absolutely want to compare all fees, interest rates, and terms before committing. Either option can help you pay off debt faster -- just make sure to choose the one that fits your budget and goals.

Compare the best personal loans

Get the best rates and terms to fit your needs. Here are a few loans we'd like to highlight, including our award winners.

Lender APR Range Loan Amount Min. Credit Score Next Steps
7.99% - 24.99%
$2,500 - $40,000
660
7.99% - 19.49%**
$2,000 - $30,000
740
6.70% - 35.99%³
$1,000 - $50,000¹
300

FAQs

  • Most top offers require a score of 670 or higher, though some cards may accept lower scores with a shorter 0% intro APR period.

  • Both involve a hard credit inquiry, which may temporarily lower your score. Over time, though, paying off debt will improve your credit health.

  • Yes, but the total transfer amount must be under the card's credit limit. Watch for fees and the expiration date of the 0% intro period.

  • In most cases, yes. Personal loans allow you to combine multiple balances into one monthly payment, often with a lower rate and set end date.

  • No. In fact, keeping it open can help your credit utilization ratio. Just avoid adding new charges to the old card.