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Americans carried a staggering $1.18 trillion in credit card debt in the first quarter of 2025, according to Motley Fool Money research. But if you’re carrying some credit card debt, fear not — there are plenty of ways to get rid of it.
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Two of the best ways to tackle debt are balance transfer credit cards and personal loans. Both can help you save a lot of money in interest, but they’re designed for different financial situations.
Here’s how to choose the right tool for your debt payoff strategy.
How a balance transfer works
A balance transfer credit card lets you move your existing credit card debt to a new card with a 0% intro APR, often for 12 to 21 months. During that period, you won’t pay any interest on your transferred balance.
For that reason, balance transfer cards are a fantastic option — if you’re confident you can pay off your debt within the promo window. Just make sure you don’t carry a balance beyond that 0% window or else the card’s higher interest rate will kick in.
You’ll usually need a “good” credit score — 670 or higher — to qualify for a balance transfer card, and you’ll need to pay an upfront fee of 3% to 5% of the transferred balance. Still, that’s probably a lot less than the interest you’d have to pay, so it’s almost always a valuable tradeoff.
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How a personal loan works
A personal loan is another viable debt payoff option. Personal loans give you a lump sum of money upfront which you can use in all sorts of ways — including paying off existing debt. Then you repay the loan in fixed monthly payments over a handful of years, usually two to seven.
Unlike balance transfer cards, interest starts accruing immediately, but your interest rate and monthly payment won’t change. In May 2025, the average APR on a two-year loan was 11.57%, according to the Federal Reserve — much lower than credit card APRs, which are usually 20% or higher.
A personal loan offers versatility, too. You can use it to cover plenty of other things, like a large expense or unexpected emergency.
On the downside, many personal loans charge origination fees, usually 1% to 10% of the amount borrowed. Your interest rate is also tied to your credit score, so if your credit isn’t strong, you may not get a great rate.
Still, for those who want lower interest over a longer period of time, a personal loan is the way to go.
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Which one is right for you?
Choosing between a balance transfer versus a personal loan comes down to your repayment timeline and credit profile.
Ask yourself:
- How much do I owe? Loans can generally cover bigger amounts than balance transfer cards. Check the limit on any cards you’re considering to be sure.
- How fast can I pay it off? Within 12 to 21 months? A balance transfer may save you more. Need more time? A loan’s longer term may be a better fit.
- What’s my credit score? 670 or higher? You likely qualify for both options. Below 670? A personal loan might be more accessible (but watch out for predatory lenders).
- How do I manage spending? Disciplined with your spending? A balance transfer could be ideal. Struggle to stay out of debt? A personal loan will help you avoid more spending.
Bottom line
If you have strong credit and can repay your debt within the initial promo window, a 0% intro APR balance transfer card is your best bet. On the other hand, if you want lower interest rates than a typical credit card, along with a longer payment period, a personal loan is the way to go.
But the big takeaway here is there’s no one-size-fits-all way to get rid of debt. The best tool will always be the one that fits your budget, habits, and timeline.
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