Although a loan is a type of financing structured to help you pay for important investments like your education or a car, that doesn’t mean it’s devoid of drawbacks. For many, large amounts of debt are a significant source of stress. According to the American Psychological Association, 62% of Americans are stressed about money. If your debt is overwhelming and snowballing from high interest rates, you may want to consider a balance transfer to regain control over your finances.

Balance transfers are completed using balance transfer cards and allow you to lump what you owe onto a credit card with an intro interest rate (usually 0%) for a set amount of time. For those buried by debt, a balance transfer delivers respite from acquiring additional debt from interest expenses, so debtors can focus on paying down their outstanding balances. Here’s all you need to know about paying off a loan with a balance transfer card, including if it’s even possible.

Is it possible to pay a loan with a credit card?

In short, yes, you can pay a loan with a credit card. Conducting a balance transfer for other debts like traditional loans allows you to take advantage of a lower interest rate. However, the ability to complete a balance transfer is dependent on the card issuer; not all credit card issuers allow loan balance transfers.

To conduct a balance transfer, you’ll need to apply for a balance transfer card. Balance transfer cards we review provide a 0% intro APR period. Moving your loan balance to a balance transfer credit card means you can focus your efforts on diminishing your debt within the intro 0% APR period, which may range from 12 and 21 months, depending on the card you select.

One drawback of using a balance transfer for paying off a loan is that the credit card issuer will often charge you a balance transfer fee. This fee is based on the balance you’re moving over to the new card. In most cases, the cost will be between 3% to 5% of the balance you transfer. While 3% — or even 5% — doesn’t seem like much, it can add on a hefty amount of additional debt. For example, if you’re transferring a debt of $5,000 and pay a 5% balance transfer fee, $250 gets added to your total debt load.

As you can see from this scenario, the drawback here is that you’re adding more debt to your outstanding balance. If you’re transferring over a large amount of debt, you’re going to have to pay more in balance transfer costs. That said, when you compare this one-time fee to your loan’s interest rates, you’re likely going to pay a lot less for the balance transfer fee than you would if you left the loan with your current lender. As such, a balance transfer can be a money-saving option.

Before signing on the dotted line, it’s essential to weigh the pros and cons before you commit to a balance transfer. You will need to confirm you can pay off your debt within the intro low or no-interest period and ensure that the balance transfer fee won’t put you over the edge into debt from which you can’t financially recover. Otherwise, you risk being stuck with the interest rate that kicks in when the intro period is over, potentially sinking you in deeper.

A balance transfer takes between 2 weeks and 6 weeks to fully settle, the timeline depends on the card issuer. To find this information on your own, you should look through your credit card terms and conditions or call the credit card issuer yourself. Why is this so crucial? Because it can help you avoid paying another month of high interest on your loans.

Which issuers allow this?

Not all credit card issuers allow cardmembers loan balance transfers. Below are the card issuers that allow you to pay a loan with a credit card:

  • Barclays
  • Capital One
  • Chase
  • Citi (a NextAdvisor advertiser)
  • Discover
  • Wells Fargo

Each credit card issuer has specific requirements for approval for a balance transfer card. However, if you have a poor credit score, you’ll find it’s more challenging to qualify. Any application for a new line of credit will temporarily lower your credit score because it requires a hard inquiry on your credit report, making it that much harder if you try to get approved in the future while your credit score is down. Adding insult to injury is that your lower credit score might also mean you’re stuck paying a higher interest rate since the lender will view you as a riskier borrower.

If this is the case, you may want to spend some time working on raising your credit score before applying for a balance transfer card. Even paying down a portion of your debt can help improve your finances and help boost your credit score.

Is this the right solution for me?

Although transferring debts might be a solution for some, it’s not right for everyone. If you’re considering using a balance transfer to pay off a loan, there are some important considerations to make first. A balance transfer might be a good idea if:

  • A balance transfer allows you to save a considerable sum, even after adding the balance transfer fees.
  • You can avoid using your balance transfer card for new purchases and focus on paying off your loan.
  • You can pay off your debt before the intro interest rate ends and the regular APR starts.

Make sure you do your due diligence and weigh the pros and cons of a balance transfer, then decide if it makes sense for your financial circumstances. Be honest about what monthly payments you can afford if you choose to do it, and remember to practice responsible payment behavior. Whether you need a personal loan balance transfer or a student loan balance transfer, you can leverage this financial tool to manage your debt better and regain peace of mind.

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.