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Here’s a concerning stat: Americans owed $1.18 trillion in credit card debt in the first quarter of 2025, according to Motley Fool Money research. If you’re adding to that number, though, fear not — there are plenty of smart ways to cut down on high-interest debt.
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Two of the best tools available are balance transfer credit cards and personal loans — but they work very differently, and the right choice depends on your situation.
Keep reading to learn whether a personal loan or balance transfer is right for you.
Balance transfer vs. personal loan: How they work
A balance transfer credit card lets you move your credit card debt to a new card that offers 0% intro APR for a limited time, typically 12 to 21 months. This gives you a window to pay off your debt without any interest, helping you save hundreds or thousands of dollars.
Balance transfers are quick to set up, don’t require collateral, and are typically your strongest option if you can pay off your balance within the promo period. There are a few trade-offs — you’ll usually pay a 3% to 5% fee on the amount you transfer, and you’ll also need a “good” credit score of 670 or higher to qualify for most cards. But it’s still a super strong debt-erasing option.
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A personal loan, on the other hand, gives you a lump sum of money you repay in fixed monthly installments, usually over two to five years. Interest starts accruing right away, but your rate and payment never change. That predictability can make it easier to stay on track, especially if you struggle with credit card spending.
Personal loans may also come with origination fees, and if your credit score isn’t strong, your rate may not be much better than what you’re paying now. But they can still be a smart option if you need a longer payoff window or don’t qualify for a balance transfer card.
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Which should you choose?
Choosing between a balance transfer versus a personal loan comes down to a few factors: your debt type, your timeline, and your credit score.
Here’s how to think it through:
Type of debt
- All credit card debt? A balance transfer card is likely best.
- Multiple debt types? A personal loan can simplify everything into one payment.
Payoff timeline
- Can you pay off in 12-21 months? A balance transfer could save the most.
- Need more time? A personal loan offers longer, fixed repayment.
Credit score
- 670 or higher? You’ll likely qualify for both options.
- Below 670? A personal loan may be easier to get — but be sure to compare rates.
How do you manage money?
- Disciplined and confident you won’t rack up more debt? A balance transfer can work well.
- Struggled with overspending or carrying balances? A personal loan’s fixed structure may help you stay on track.
Stop letting debt hold you back
The best debt payoff plan is the one you can stick with. Balance transfers and personal loans both offer powerful ways to reduce interest and make real progress — but the right choice depends on your financial situation.
If you have strong credit and a clear payoff plan, a 0% intro APR balance transfer can help you get out of debt fast. If you need more time, though, or want the peace of mind that comes with fixed payments, a personal loan may be the smarter path.
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