pay down debtUpdated: June 9, 2017

If you’ve got some credit card debt you’re looking to consolidate, you may be wondering what your options are for paying it off. While you may have heard of options like balance transfer credit cards and personal loans, you may not know exactly how these things can help you, or which is the better option of the two. To help, we’ve detailed everything you need to know about how balance transfers and personal loans allow you to pay off debt, as well as which option is best for you and your situation.

How can a balance transfer credit card help me?

If you’ve got some credit card debt with an interest rate that’s too high to handle — regardless of whether it’s from your holiday purchases, unexpected emergency expenses or any other reason — a balance transfer credit card might just be the right solution for you. These types of credit cards offer long-term 0% intro APR on balance transfers, which means you can transfer your credit card balance to this card and get some time to pay down or pay off your balance interest-free. It’s important to note that these 0% intro APR periods don’t last forever, but most balance transfer credit cards offer 0% intro APRs for at least a year — sometimes even longer than that. Another thing to note is balance transfer fees. Most cards, with the exception of BankAmericard Credit Card (detailed below), charge a small fee (usually 3% to 5% of the total) to transfer the balance from your current credit card. While it may not be ideal to pay a balance transfer fee, it’s usually still worthwhile, especially when you compare this one-time fee to the ongoing interest you’re paying on your current credit card.

Best balance transfer credit cards

There are a number of balance transfer credit cards to choose from, but here are some of the top options on the market.

No balance transfer fee: BankAmericard Credit Card

pay down debtIf you’re looking to transfer an existing balance to a new credit card that offers a 0% intro APR and charges no balance transfer fee for transfers completed in the first 60 days of account opening, the BankAmericard Credit Card is for you. This card offers a 0% intro APR for 15 billing cycles on purchases and on any balance transfers made in the first 60 days of account opening. While you won’t pay a balance transfer fee for transfers made in the first 60 days of account opening, you’ll pay a balance transfer fee of $10 or 3% of the transfer (whichever is greater) after the 60-day period is up, so it’s worth completing the transfer sooner rather than later. As an added bonus, cardholders will pay no annual fee with this credit card.

Long 0% intro APR period on purchases and balance transfers: Citi Simplicity Card – No Late Fees Ever

pay down debtThe Citi Simplicity Card – No Late Fees Ever (a NextAdvisor advertiser) offers one of the longest 0% intro APR period we’ve seen. Cardholders will receive a 21-month 0% intro APR on purchases and balance transfers (with a 3% balance transfer fee) — that’s almost 2 years of no interest! Plus, you won’t have to worry about any extra fees with this card, as it charges no annual fee, no late fees and no penalty fees, and you get to pick your own payment due date. Those looking for an equally long 0% intro APR period and added perks, like access to Citi Concierge for help booking flights, hotels and more, will want to check out the Citi Diamond Preferred Card.

Best for less-than-perfect credit: Discover it – 18 Month Balance Transfer Offer

pay down debtIf you have average to excellent credit and are in the market for a balance transfer card, you’ll want to check out the Discover it – 18 Month Balance Transfer Offer. This card offers 18 months of 0% intro APR on balance transfers (with a 3% balance transfer fee) as well as a 6-month 0% intro APR on purchases. There’s no annual fee associated with this card, and it offers some strong cash back rewards, which means it’s still a great card to have in your wallet after you’ve paid off the transferred balance. Cardholders will earn 5% cash back in rotating categories like gas stations, restaurants, Amazon.com, wholesale clubs and more (up to the quarterly maximum, then it’s 1% after that) every quarter you activate, plus unlimited 1% cash back on all other purchases. But the rewards don’t stop there, as Discover will actually match the cash back you’ve earned at the end of your first year. That means if you’ve earned $250 cash back in your first year as a cardholder, Discover will give you a total of $500 back!

How can a personal loan help me?

If you have debt that you need more time to pay than you’ll get with a balance transfer credit card, a personal loan may be a better option for you. Unlike a balance transfer credit card, you will not have a 0% intro APR period with a personal loan, but you will have clear repayment terms when you open the loan, which means you’ll know how much you need to pay every month. That said, you’ll want to make sure the interest you’d pay with the personal loan is lower than the interest you’re currently paying on your debt because if it’s not, you’ll just pay more in the long run. While you can get a personal loan from your local bank, a personal loan service may be a better option, as most of these services allow you to borrow money quickly and conveniently, without the headache of going through a traditional bank’s approval process.

Best personal loan services

Whether you’re looking to borrow a larger amount of money or need a bit more time to tackle your outstanding debt, we’ve detailed three of the best options for personal loan services.

Lending Club: 24- to 60-month repayment terms

pay off debtIf you’re looking for a loan with a simple application process and competitive interest rates, Lending Club is a great option for you to consider. It offers loan amounts anywhere from $1,000 to up to $40,000 for things like debt consolidation and medical bills, among others. Lending Club’s repayment terms range from 24 months (2 years) to 60 months (5 years) and APRs range from 5.99% to 35.89% — keep in mind, your rate will be fixed. Like most other personal loan services, Lending Club offers unsecured loans, meaning you won’t have to put up any collateral to open the loan.

Prosper: 36 or 60 month repayment terms

pay off debtAnother personal loan service to consider is Prosper. Upon approval, you can request between $2,000 to $35,000 for a number of things, including debt consolidation, medical/dental expenses and taxes, among others. It offers two repayment options: 36 months (3 years) or 60 months (5 years), depending on the amount you borrow as well as other factors taken into consideration during your application process. Prosper’s APR rates start at 5.99% and range up to 36% and all of its personal loans are unsecured.

SoFi: 36, 30 or 84 month repayment terms

pay off debtThose looking for a service that offers up to 84 month (7 years) repayment terms will want to consider SoFi. This service provides funds for paying off credit card debt or consolidating high-interest loans, among others, and offers personal loans from $5,000 to $100,000. Like the other two personal loan services we’ve detailed, SoFi are also unsecured, requiring no collateral in exchange for funds. Unlike the other personal loan services on this list, SoFi’s offers 36 months (3 years), 60 months (5 years) or 84 months (7 years) repayment terms and the service has fixed and variable rates that range depending on whether or not you choose to autopay — see the ranges here.

Is a balance transfer or personal loan best for me?

Can’t decide whether a balance transfer credit card or a personal loan is the best option to pay off your debt? There are a few things you’ll want to consider when making the final decision on which is best for your specific situation and financial needs. In general, balance transfers are best for those looking to consolidate credit card debt, as you cannot transfer other kinds of debt, that can be paid off within the 0% intro APR period. If you’re not sure whether a balance transfer is your best bet, you can plug in your transfer amount, monthly payment and credit level into our free Balance Transfer Calculator to see how much you can save with a balance transfer and how long it’ll take you to pay off the transferred balance with each card we review (including the ones detailed above). On the other hand, if you need a longer amount of time to pay off the debt, or if you’re looking to pay off something other than credit card debt, you may want to opt for a personal loan instead. Even though you’ll pay interest with this option, if the rate is lower than your credit card’s interest, you’ll come out ahead. Another option to consider is a combination of the two, as you’ll be able to save on interest if you can pay off part of your debt with a card offering a 0% intro APR on balance transfers because it means you’ll be able to get a smaller personal loan.

What if I don’t qualify for either?

If you don’t think your credit allows you to qualify for a balance transfer card or a personal loan, or if your application has already been denied, there are some things you can do to help remedy your bad credit before you apply for another card or loan. It’s important to note that your bad credit won’t improve overnight, but when you continue to take steps to help put your best financial foot forward, such as paying your bills on time (even if it’s just the minimum payment) and regularly checking your credit reports, you can work to improve your credit scores over time.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.