Loan vs. Balance Transfer: Which is Better for Paying Off Debt?

Personal loan vs. balance transfer card

Both can cut interest while you pay down debt. Balance transfers shine if you can clear the balance during the 0% promo. Personal loans help when you want fixed payments and more time to repay.

Which is cheaper?

Feature	Personal loan	Balance transfer card
Intro rate	None; fixed APR	0% promo (usually 6–21 months)
Fees	Possible origination	Transfer fee 3–5%
After promo	Same fixed APR for the term	Reverts to 15–29% variable APR
Payment type	Fixed installments, set payoff date	Revolving; payoff depends on how much you pay

Choose a balance transfer if

• You have excellent credit to qualify for a long 0% promo.
• You can pay off the transferred balance before the promo ends.
• You will not add new purchases to the card (those may accrue interest immediately).
• You are comfortable with the transfer fee and the potential revert APR.

Choose a personal loan if

• You want a fixed payment and guaranteed payoff date.
• Your credit may not qualify for the best 0% offers, or your promo window would be too short.
• You are consolidating multiple balances and want to simplify to one payment.
• You prefer to lock in a rate and avoid utilization spikes on credit cards.

How to decide

• Calculate whether you can clear the balance within the promo period after paying the transfer fee.
• Compare total cost: fee + promo savings vs. personal loan interest and fees.
• Avoid new card spending during payoff; otherwise debt can grow again.
• Ensure no prepayment penalty on a personal loan so you can pay faster if cash flow improves.

FAQs (top questions)

Is a balance transfer worth it with a 5% fee?

Yes, if the promo savings exceed the fee and you will pay off before the promo ends. Otherwise, the revert APR can erase savings.

Can I transfer balances between cards from the same bank?

Usually no. Most issuers require the transfer to a different issuer’s card.

Do personal loans hurt credit more than transfers?

Both involve a hard inquiry. Personal loans shift debt to an installment, which can lower utilization. Transfers keep debt on revolving credit, affecting utilization until paid down.

Should I close cards after a consolidation loan?

Consider keeping no-fee cards open to preserve credit history and utilization. Avoid using them until debt is under control.

Can I use both—a transfer and a small personal loan?

You can split balances if it lowers total cost, but manage applications closely to avoid multiple fees and utilization spikes.

Internal Links

• Review loan consolidation options for other strategies.
• See repayment strategies to stay on track.
• Understand APR basics before comparing offers.

External resources

• CFPB on balance transfers

Conclusion

Use a balance transfer if you can clear the balance within the 0% window and the fee is worth the savings. Choose a personal loan for predictable payments, a firm payoff date, and to avoid high revert APRs. Run the numbers and pick the path with the lowest total cost you can realistically execute.