Balance Transfer vs. Personal Loan: Best Way to Pay Off Credit Cards

Credit card debt can feel like quicksand — high interest rates, minimum payments, and no clear end in sight. If you’re serious about paying it off in 2025, two of the most popular strategies are: balance transfer credit cards and personal loans.

But which option is right for you? In this guide, we’ll break down the pros, cons, and best use cases for both — so you can confidently choose the best path to becoming debt-free.

What Is a Balance Transfer?

A balance transfer involves moving your existing credit card debt to a new card that offers a low or 0% introductory APR for a limited time — usually 12 to 21 months.

During the promo period, you pay no interest on the transferred balance, allowing more of your payments to go toward reducing the principal.

Key Features:

• 0% APR intro period (typically 12–21 months)
• Balance transfer fee (usually 3%–5%)
• Requires good to excellent credit (typically 680+)
• Great for short-term debt payoff plans

What Is a Personal Loan?

A personal loan is an unsecured loan you can use to consolidate and pay off high-interest credit card debt. It provides a lump sum of money that you repay in fixed monthly installments over a set period — usually 2 to 5 years.

Key Features:

• Fixed interest rate and fixed monthly payments
• Terms range from 24 to 60 months
• Available for borrowers with fair to excellent credit (600+)
• Used for long-term repayment or larger balances

Balance Transfer vs. Personal Loan: Side-by-Side Comparison

Feature	Balance Transfer Card	Personal Loan
Best For	Short-term payoff (≤ 18 months)	Larger balances and longer repayment (2–5 years)
Interest Rate	0% intro APR, then 18%–29%	Fixed rate, typically 7%–24%
Credit Score Required	Good to excellent (680+)	Fair to excellent (600+)
Fees	3%–5% transfer fee	Origination fee (0%–10%)
Monthly Payments	Varies based on how much you pay	Fixed payments every month
Flexibility	Flexible (but risky if you only pay the minimum)	Structured and predictable

When a Balance Transfer Makes Sense

Consider a balance transfer card if:

• You have a credit score above 680
• Your total credit card debt is under $15,000
• You can commit to paying it off during the promo period
• You want to avoid loan applications and prefer managing debt via credit cards

Top Balance Transfer Cards in 2025:

• Chase Slate Edge® – 0% APR for 18 months
• Citi Simplicity® Card – 0% APR for 21 months
• BankAmericard® – Low transfer fee + long intro rate

When a Personal Loan Is Better

A personal loan may be a better fit if:

• You owe more than $15,000 in credit card debt
• You want fixed payments and a clear payoff date
• Your credit score is at least 600 and you qualify for a decent interest rate
• You’ve struggled with discipline in the past and need a structured repayment plan

Top Personal Loan Lenders in 2025:

• SoFi – No fees, flexible terms, rate discounts
• Upstart – Works with borrowers with limited credit history
• LightStream – Low rates for good-to-excellent credit
• Discover Personal Loans – Fixed payments with no prepayment penalty

Credit Score Impact: Which Is Safer?

Both options can help improve your credit score if used responsibly, but there are key differences:

Balance Transfer Impact:

• May lower your score temporarily due to hard inquiry
• Can help reduce credit utilization — a major factor in scoring
• Missing payments after the intro period can damage your score quickly

Personal Loan Impact:

• Hard inquiry may drop score slightly
• Improves credit mix (installment + revolving credit)
• On-time payments build score steadily

Which Option Saves You More Money?

Balance transfer: If paid off within the 0% APR period, this is often the cheapest way to pay down credit card debt — even with the transfer fee.

Personal loan: Better for people who need more time to repay. You lock in a lower fixed interest rate and avoid surprise rate hikes.

Watch Out for These Risks

Balance Transfer Risks:

• Failure to pay off debt before the intro rate ends = high interest
• Missed payments may cancel the 0% offer
• You may accumulate more debt if you keep using your old cards

Personal Loan Risks:

• You might not qualify for a competitive interest rate
• You may still keep your credit cards open and rack up new debt
• High origination fees can offset savings

Final Verdict: Balance Transfer vs. Personal Loan

There’s no one-size-fits-all solution, but here’s a quick breakdown:

• Choose a balance transfer if: You have good credit, a smaller balance, and can repay within 12–18 months.
• Choose a personal loan if: You need longer to repay, want predictable payments, and have multiple high-interest accounts to consolidate.

Pro Tip: Don’t Just Choose — Commit

Whichever route you pick, the key to success is discipline. Stop using credit cards, make all payments on time, and avoid falling back into debt.

Both balance transfers and personal loans can be powerful tools — but they require commitment to truly work.

Still not sure? Consider talking to a certified credit counselor from a nonprofit agency like NFCC.org to get personalized advice before choosing a path.