Personal Loan Details

Balance Transfer Loan Vs Balance Transfer Credit Cards

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Are you struggling in a vicious cycle of endless credit card debt? If so, you need to strategically make the right moves to decimate your debt sooner. In this blog, we will talk about two top options that might help you deal with the situation: balance transfer credit cards and balance transfer personal loans. Since both these financing options have their fair share of pros and cons, we will discuss them in detail to figure out which among the two is best suited for your situation. 

Balance Transfer Credit Cards

Widely popular in the financial industry, balance transfer cards been used by credit card companies to get new customers and win back the old ones. These cards claim to come at a 0% interest rate without any monthly fees. The catch: you’re required to clear your dues within six to twelve months, after which an exorbitant interest rate is levied on your outstanding balance. 

So, while these cards might seem promising at the outset, they don’t hold as many benefits after the completion of the promotional period. At that point, you’re not only required to pay a high interest rate but are also charged added fees for availing the facility.

Probably the worst part about balance transfer cards is that they are no way better than your actual credit cards. Like your credit card, they too end up adding to your revolving debts, and if you’re not careful enough, you can soon find yourself in a trickier situation.

Balance Transfer Loans

Tailored to meet the same purpose as balance transfer cards, balance transfer personal loans are an excellent way to pay off your high-interest credit card debts. This financing option involves consolidating your existing debts to a single debt with a low monthly installment. Unlike a balance transfer credit card which is a form of revolving debt, balanced transfer loans have a fixed term and fixed interest rate. That means, the APR you agree with while applying for the loan will be the same throughout your entire tenure of the instant loan. There’ll be no surprise notifications of high rates. Also, the moment you sign the dotted line, you will have complete clarity regarding the time when your loan will be finally paid off.

Unlike balance transfer credit cards, balance transfer loans do not come with any added fees. You will, however, need to pay origination fees ranging from 1% to 6%. The biggest benefit of this financing option is that the interest rates charged are significantly lower than balance transfer credit cards.

Bottom Line

Now that you know about both balance transfer personal loans and credit cards, assess your situation and choose the one that works best for you. Remember, while both the options are equally good, balance transfer credit cards are best suited for individuals who are looking to pay off their debts sooner (in less than 12 months or so). Alternatively, balance transfer personal loans are more useful to the ones who are looking for a longer repayment window. 

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