How balance transfer credit cards work
A balance transfer credit card lets you move outstanding debt from one or more credit cards onto a new credit card with a 0% introductory annual percentage rate (APR) for a limited time. This can allow you to save on interest charges over time. Plus, with all of your debt on just one credit card, your balances can be much easier to manage.
Balance transfer cards typically have a 3% to 5% fee on transferred balances.
Most balance transfer cards offer a 0% intro APR for anywhere from six to 21 months. During this intro period, you won't have to pay interest on the transferred balance, which can help you pay off the principal debt faster. Once the introductory period ends, you’ll incur interest on any remaining balance at your card’s regular variable APR.
Note that balance transfer cards also come with balance transfer fees, which are typically around 3% to 5% of the transferred amount.
How personal loans work
Personal loans are installment loans that you can use for nearly any purpose, such as debt consolidation, home renovations, medical expenses or vacations. They’re typically unsecured debt, which means they don’t require collateral. Most personal loans come with fixed interest rates.
Personal loans generally come with fixed rates and terms for the life of the loan.
If you’re approved for a personal loan, you’ll receive a lump sum and repay it over time in fixed monthly installments, usually over two to seven years.
» MORE: Best personal loan companies
Comparison: balance transfer cards vs. personal loans for debt consolidation
Personal loans typically have longer loan terms and offer fixed repayment timelines, whereas balance transfer credit cards allow more flexible repayment schedules. Both can affect your credit score when you apply, but both can also improve your credit over time if you use them responsibly.
Here’s how balance transfer cards and personal loans compare:
| Balance transfer card | Personal loan | |
|---|---|---|
| APR | 0% intro APR for 6 to 21 months, then a variable APR applies | Usually fixed for the life of the loan |
| Fees | 3% to 5% balance transfer fee | Origination fees, prepayment fees or late fees may apply |
| Repayment term | N/A | Usually 2 to 7 years |
| Credit score requirement | Usually 670 to 850 | Usually 670 to 850, though some lenders may accept scores as low as 580 |
| Best for | Small to moderate credit card debt | Combining multiple large unsecured debts into one loan |
Should you get a balance transfer card or a personal loan?
Both balance transfer cards and personal loans can help you tackle debt, but one may be a better fit for you than the other. Here’s what to consider:
Your credit history
If you have a fair credit score, or a FICO score of 580 to 669, you may have better odds of getting a personal loan over a balance transfer card. Credit card issuers usually require a good to excellent credit score, or a FICO score of 670 to 850, for balance transfer cards.
“[If] your credit has taken a hit, a personal loan may be more accessible and in many cases, more reliable,” said Melissa Cox, a certified financial planner (CFP) at Future-Focused Wealth.
Also, if you have a lower credit score, you may have to pay a higher APR. If you have good credit or better, you’ll typically be offered better loan terms and rates.
Debt size
Personal loans are typically better for larger debts since they come with fixed rates, set monthly payments and longer repayment terms, often of up to five or seven years. Balance transfer cards are generally better for smaller debts.
Repayment timeline
Cox said to ask yourself how long you’ll realistically need to pay off the debt. If you could realistically repay your debt within two years, a balance transfer card may make more financial sense. If not, a personal loan may be a better choice.
“[A] fixed-rate personal loan with a structured payoff plan might actually save you more in the long run,” Cox said.
[A] fixed-rate personal loan with a structured payoff plan might actually save you more in the long run.”
Total borrowing cost
Consider how much a balance transfer card or personal loan will cost you over time. For example, balance transfer cards typically come with balance transfer fees and high APRs once the intro period ends. It’s generally best to only open a balance transfer card if you have a plan to pay off your debt before the intro period expires.
If you want to take out a personal loan, look for fees like origination fees, application fees or prepayment penalties that could add to your total borrowing cost. For instance, origination fees typically range anywhere from 1% to 10% of the loan amount.
FAQ
Does a balance transfer hurt your credit score?
A balance transfer credit card can temporarily hurt your credit score when you apply for one since the credit card company will perform a hard credit inquiry. Over time, a balance transfer card could improve your credit if you pay off your debt and reduce your credit utilization.
What is the main downside of a balance transfer?
The main downsides of a balance transfer credit card are balance transfer fees (typically 3% to 5% of the transferred balance) and potentially high APRs after the intro APR period ends.
Can I pay off a balance transfer or a personal loan early?
Yes, you can pay off a balance transfer card or a personal loan early. It’s best to pay off a balance transfer card any time before the intro APR period ends. For personal loans, the earlier you pay it off, the less interest you’ll pay. Most personal loans also don’t charge prepayment penalties, though it’s worth confirming this with a lender before paying off a loan early.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from reputable publications to inform their work. Specific sources for this article include:
- Consumer Financial Protection Bureau, “How Long Can I Keep a Low Rate on a Balance Transfer or Other Introductory Rate?” Accessed April 16, 2026.
