Balance Transfers vs Personal Loans: Which is Right for You?

Not sure whether to choose a balance transfer card or a personal loan? Learn the differences and how to pick the best option for managing your debt.

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Written by Hayley Bevan and Victoria Smith

Published on September 4th, 2025

Last reviewed on September 4th, 2025

6 mins read

Understanding credit cards

If you’re making multiple repayments every month, you might find it easier to consolidate your debt with a balance transfer credit card or a personal loan.

But knowing which debt repayment tool is best for you depends on your personal circumstances, how much you owe, and what you want to achieve in your financial future.

In this guide, we’ll outline what to consider in deciding what is right for you by explaining balance transfers and personal loans, as well as addressing the commonly asked questions around both options.

What is a balance transfer?

A balance transfer can help you deal with existing debt by transferring the balance from one or multiple cards to a single card, which can help you take control of your finances.

By taking out a balance transfer credit card, you can also benefit from 0% or low-interest introductory offers which give you the breathing space to make more manageable monthly repayments.

We explain more about balance transfers here, but one of the key points to remember is they should only be used if you’re confident existing debt can be cleared within the introductory offer.

Should you carry a balance beyond this period, you could be faced with higher interest rates, making it more challenging to get out of debt and manage your finances.

What is a personal loan?

A personal loan is a lump sum borrowed from a bank or other types of lenders which often comes with quick approval, fixed interest rates, and a predictable repayment structure.

Depending on the type of loan you secure, terms will typically range between one to five years, which could work in your favour if you prefer to spread repayments over a longer length of time.

You might also find a personal loan is the right option to start a business, purchase a family car, or consolidate existing debt into a single payment. Whatever the reason, always do your research and seek appropriate advice.

Key differences: balance transfer vs personal loan

Although a balance transfer and personal loan can both help to lower interest payments and potentially avoid credit card fees, there are key differences between both borrowing methods.

Interest rate: a balance transfer starts with a low-interest offer which usually rises to a higher APR once the promotional period has expired. A personal loan, however, offers a fixed rate for the duration of your lending period.

Repayment structure: to avoid further credit card fees, you should aim to clear balance transfer debt within the promotional period. A personal loan could have a repayment structure spanning across one to five years.

Usage: a balance transfer might be a preferred option for paying off other credit cards incurring high interest rates. Provided you can comfortably make repayments, a personal loan could be used for other purposes such as home improvements or even a wedding.

Application process: provided you meet the criteria, both borrowing methods can be approved immediately for online applications. But before you apply, it’s important to remember both options could include a hard credit check which might temporarily lower your credit score. For that reason, be selective with your applications and avoid making more than one in a short period of time.

Balance transfer credit card vs personal loan: which should you choose?

Before you commit to a balance transfer credit card or a personal loan, you should weigh up your financial situation, seek professional advice and compare available offers that work with your personal circumstances.

For example, if you have a combined amount of under £5,000 credit card debt with multiple lenders, a balance transfer could be the right move to a healthier financial future.

Not only may it help to consolidate debt into a single pot, but you can also benefit from low-interest introductory periods which goes a long way to make monthly repayments more manageable.

You can find out more about balance transfers and the impact on your credit score here. But the key takeaway is to clear your existing debt before the introductory period ends – otherwise, you could be back to square one.

Alternatively, if you have different kinds of debt in multiple places, you might decide a personal loan is the right borrowing strategy to get you back on track with your finances.

Similar to balance transfers, it simplifies money management by consolidating debt into a single place. You’ll also benefit from a predictable payment structure, so there’s no surprises with what you need to set aside each month.

With either option – be it a balance transfer or personal loan – take the time to assess whether you can reasonably afford to make repayments. You should always compare APR, fees, interest rates, and the total cost of borrowing. Taking time to make the right decision could make all the difference to a future you.

Requirements: What you need to qualify for a balance transfer vs personal loan

To secure a balance transfer or personal loan, your potential lender will check you have UK residency, are aged 18 or over, and have proof of income.

Provided you tick all the boxes, checks will also be made on your credit score to assess how responsible you are with credit. For balance transfers, scores ranging between fair and good are generally the benchmark, and for personal loans it’s good.

Specific requirements for each type of loan (e.g. borrowing amount, loan duration, and interest rates) will typically depend on the assessment of your application. The stronger your application, the more likely it is you’ll secure favourable terms.

But before you apply for a balance transfer or personal loan, it’s a smart move to check your eligibility. That way, you’re in a stronger position to avoid unnecessary credit checks recorded on your file.

Whether a balance transfer and personal loan is right for you will depend on your personal circumstances and what you want to achieve in your short- and long-term future.

With either option you should always check the fees, repayment terms, interest rates, and any other conditions that could impact your financial situation.

If you feel a balance transfer is right for you, take our free eligibility check that’s over in as little as 60 seconds – with no impact on your credit score.

Representative 34.9% APR (variable) for Aqua Classic

This article is for general information purposes only and does not constitute financial advice. Individual circumstances vary, and you should seek independent, professional advice before making any financial decisions. Always consider your personal situation and consult a qualified adviser if you're unsure about the best option for you.

Failure to make payments on time or to stay within your credit limit means that you will pay additional charges and may make obtaining credit in the future more expensive and difficult.

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