Personal Loan vs. Balance Transfer Card: Which Is Better

Debt repayment isn’t cut and dry—you must consider factors beyond the amount you owe and the length of the term. Whether you have a small personal loan or something more significant, things like your credit score and the interest rate determine how much your debt will affect your monthly budget.

Reducing your interest rate can help you pay off debts sooner rather than later. If you’re planning to repay debts, one of the things you might be considering is a balance transfer. Here are things to keep in mind when choosing between these two financing options.

What Is a Balance Transfer?

As the name implies, balance transfers take existing debt and place it on a credit card that offers a zero percent promotional interest rate. These zero percent rates are only for a set period, and most transfer cards require you to pay a balance transfer fee. Despite these, the prospect of paying no interest on a loan makes this option compelling.

Balance Transfer vs. Personal Loan

In contrast to balance transfers, personal loans won’t provide a zero percent interest rate, even for a short period. However, the rate you pay will undoubtedly be lower than the standard APR you will get on a credit card or the rate you’ll get from other types of loans.

At times, balance transfer cards are the more sensible choice. Avoiding paying interest will help you keep your monthly expenses low, which means completing your repayments sooner. However, personal loans are advantageous in certain situations.

When Is a Personal Loan the Better Choice?

If you anticipate that it will take a long time to complete your repayments, it is better to take out a small loan. The promotional rate on a balance transfer card will not last forever—typically, they last for 18 to 29 months. Once this time is up, you will have to pay the interest rate on the credit card, which could be hefty. If you need more time, personal loans are the better option.

You might think that you can get around the limitations of a promotional rate by transferring your balance again after the promotion ends. However, this isn’t always possible—for example, some terms prevent you from qualifying for another transfer card. If you move your debt, you will have to pay another fee.

Personal Loans Mean More Security

If you get approval for a fixed-rate personal loan, you will have the same interest rate for its entire duration. Also, your debtor will give you upfront the total amount you owe, which means you will know precisely when you should end your payments. Finally, the amount due every month stays consistent, which means you can anticipate recurring monthly dues.


Two tools people use for personal finance are balance transfer cards and small loans. If you can repay the balance in a short time frame, consider getting a balance transfer card. However, if you need more time to repay, you should opt for a loan. Qualifying for a personal loan with a competitive rate lets you stay on top of your finances, budget your resources, and plan for your future.

Hometown Finance is your source for ,personal loans in Murfreesboro, TN. We go beyond offering loans—we provide security and understanding for all our clients to help them reach their financial goals. Inquire today to learn more!