Overall, you won't find a better deal than a 0% interest rate with a balance transfer to another credit card.
The credit card payoff tool can help you determine how much money you can save by using a balance transfer credit card or personal loan to move your credit card debt before paying off the balance.
To get started, look up your current total credit card balance and APR. You can find this on a recent credit card statement, or by checking your account online. Also, review your budget to determine how much you can afford to put toward paying off the debt each month.
By default, the tool uses common balance transfer and personal loan financing terms. For example, it assumes you’ll have to pay a 3% balance transfer fee (for a balance transfer card) or 3% origination fee (for a personal loan).
You can click on “customize” next to the green “see offers” button to change the fees and interest rates. You can also customize the repayment period on personal loans and the length of the 0% interest introductory period for balance transfer cards.
When you click on the green “see offers” buttons, you’ll be brought to the balance transfer card or personal loan marketplaces. Here, you can compare card issuers and lenders to try and find an option that best aligns with your target repayment period, introductory offer and fee amounts.
Your credit card debt could be quickly accruing interest based on its high interest rate, and a large portion of your monthly payment could be going toward the interest rather than paying down the underlying debt (i.e., the principal balance). Particularly if you’re only making minimum payments, it can take years to pay off a credit card and you can wind up paying more in interest than the amount you borrowed in the first place.
A balance transfer credit card or personal loan could allow you to move the debt in an advantageous way, making it easier, quicker and cheaper to pay off the debt.
Balance transfer credit cards are credit cards that offer a promotional annual percentage rate (APR) on debts that you transfer to the card. You may be able to initiate the transfer electronically, though some cards offer balance transfer checks you can use to pay a bill.
Depending on the card and offer, you might receive an introductory 0% APR that applies to balances you transfer to the card. Some cards also offer a promotional rate on purchases, but if you’re focused on paying off the balance as quickly as possible, you might want to stop using credit cards for purchases until you’ve paid off the debt.
Because the transferred debt won’t accrue interest during a 0% APR promotional period, your entire payment goes toward paying down the principal balance. Even if you continue making the same monthly payments, you’ll be able to pay off your credit card debt faster and pay less interest overall. Ideally, you can pay off the entire credit card during the 0% APR promotional period.
When you apply for a personal loan and are approved, you’ll receive loan funds you’ll use to pay off your credit card. You’ll then repay the personal loan over the predetermined repayment period with monthly payments. If you have good to excellent credit, you may get approved for a loan with a lower rate than your credit card, allowing you to save money and pay off your debt sooner.
That said, a balance transfer card could be a good option for someone who has control over their spending and the discipline to make the monthly payments without accruing more credit card debt. They’ll ideally have good credit and can get approved for a 0% APR offer with a high credit limit that allows them to transfer all (or most) of their current debt.
If that sounds like you, you can use the tool above to figure out how long it will take you to pay off the balance based on your monthly payments. Then, look for balance transfer cards that offer a promotional period that’s at least that long. Generally, the offers range from 12 to 21 months.
A personal loan might be more expensive since it will start accruing interest right away. However, it could be a better option if you have a large amount of debt, as it might be easier to get approved for a large loan than a card with a high credit limit. Additionally, personal loans often have a fixed interest rate and a predetermined repayment period.
Unlike with credit cards, there isn’t a low minimum payment option on personal loans — you have to make the full monthly payment — which could be a good thing if you want some guidance and pressure to pay off the debt.
You won’t know if you qualify until you apply. However, some lenders allow you to apply to see if you’re preapproved. They’ll check your credit report (generally with a soft pull, which doesn’t hurt your credit) and then let you know if you’re likely to be approved and the estimated terms of your offer.
If you like your preapproval offer, you could submit an official application and get an official loan offer. Double-check the loan terms before accepting, as they may be different than your preapproval offer.
If you don’t get preapproved, or don’t like the terms, you could try for preapproval from other lenders or focus on improving your credit and reapplying at a later point.
You also won’t know if you’ll get approved or what credit limit you’ll receive with a credit card until after you apply. And while some card issuers offers a soft-pull preapproval, many do not.
You can do a lot of comparative research online and visit lenders’ and cards issuers’ websites to compare their offerings. You can also use websites such as ours to quickly compare your options.
For example, our personal loan comparison page shows different lenders’ personal loan term ranges, APR ranges, origination fees and minimum credit score requirements. The tool filters lenders based on your credit score range, loan amount, where you live and whether you have a college degree.
You can click the green “see offers” buttons in this tool to go to the balance transfer card and personal loan comparison pages.
With a personal loan, the main fee you want to watch out for is an origination fee. The fee often ranges from 0% to 6% based on the lender, your creditworthiness and the details of the loan. To save money, try to find a lender that doesn’t charge an origination fee.
If the lender charges an origination fee, the money will either be taken out of your loan (which means you may need to apply for a slightly larger loan than your current credit card debt), or it could be added to the amount you need to repay.
Many balance transfer cards charge a balance transfer fee, which is often 3% or 5% of the amount you transfer to the card. Some cards don’t have balance transfer fees, but they also generally don’t offer a 0% promotional APR.
In either case, you’ll also want to watch out for late payment fees and read the loan’s or card’s terms to see what other types of fees may apply.
Your savings will depend on your current credit card debt, interest rate and monthly payment versus your new rate and monthly payment. Using the tool above, see how changes each factor will impact your savings and your repayment time.
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