![](https://paperela.com/wp-content/uploads/2022/12/pexels-tim-douglas-6567607-1000x600.jpg)
Personal Loan VS. Balance Transfer: What Is The Difference & Which One Is Better?
![](https://paperela.com/wp-content/uploads/2022/12/pexels-tim-douglas-6567607-1000x600.jpg)
To consolidate your debts, you have got two main options: You can either opt for personal loans, or you can go with balance transfers. Both of these options have their own pros and cons. For instance, personal loans can be availed quickly, whereas balance transfers take a fair bit of time. Similarly, balance transfers are more secure than personal loans.
Thus, there are several positive aspects of opting for personal loans. On the other side of the aisle, things can definitely go south if you opt for personal loans too – and the same is true for balance transfers. In simple words, personal loans and balance transfers are two stand-alone ways of consolidating your debts – with each having different perks and benefits.
![](https://paperela.com/wp-content/uploads/2022/12/pexels-karolina-grabowska-4386395.jpg)
Karolina / Pexels / Personal loans and balance transfers are two stand-alone options to consolidate your debts.
In this article, we are going to look at the perks and benefits, differences, and pros and cons of personal debts and balance transfers.
What is the Difference Between Personal Loans and Balance Transfers?
Personal loans are conventional loans to you get instant cash and pay through either monthly or yearly installments. Of course, personal loans have interests. And the interest rate depends on your credit score. If your credit score is “good,” AKA 750+, you will get low-interest rates. On the other hand, if your credit score is low – or keeps going down during the payment of your loans, the interest rate will go up.
![](https://paperela.com/wp-content/uploads/2022/12/pexels-rodnae-productions-7821685.jpg)
ROADNAE / Pexels / Unlike balance transfers, personal loans are typically and are backed by hefty interest rates.
On the other hand, balance transfers refer to the consolidation of debts by transferring funds from one or two credit cards to a new credit card. Generally, this process of ‘transferring’ funds is backed by a promotional period—a period of one to two years. So, if you continue to transfer the required amount within the given timeframe, you will not owe any interest.
Pros and Cons of Personal Loans
Here are the major pros of personal debts:
– Easy to take.
– As long as your credit score is above 750 and you pay the monthly installment, you are good.
– No hidden deductions.
![](https://paperela.com/wp-content/uploads/2022/12/pexels-andrea-piacquadio-3760067.jpg)
Andrea / Pexels / In personal loans, your credit score plays a pivotal role, which is not the case in balance transfers.
On the other hand, here are some of the major cons of personal debts:
– Personal debts are less secure.
– Unlike balance transfers, personal loans have hefty interest rates.
– You will be charged more interest rates if your credit score is low.
Pros and Cons of Balance Transfers
Here are some of the pros of balance transfers:
– Balance transfers are more secure than personal loans.
– You get a time period of one to two years to cover the loans. During this time period, you will not owe any interest.
– Achievable and easy to consolidate your debts.
And the cons of balance transfers are:
– Balance transfers can be risky sometimes.
– Though the interest rate is low in balance transfers, you may end up paying high-interest rates if you do not meet the threshold.
More in Financial Planning
-
`
Creating a Seamless Marketing Campaign Across All Online Platforms | Some Effective Strategies
Maintain Visual & Tonal Consistency The aesthetic and voice of your brand serve as the cornerstone of recognition and trust. Whether...
March 16, 2024 -
`
How Effective Are Gender-Based Violence Laws?
Imagine a world where the fear of violence doesn’t cast a long shadow over everyday life, especially for women and girls....
March 4, 2024 -
`
6 Essentials of A Successful Startup
The entrepreneurial landscape is a testament to the human capacity for innovation and resilience. Navigating this terrain requires more than just...
February 26, 2024 -
`
Why Most Americans Don’t Know Their Retirement Savings – And What You Should Do About About It!
A new report from the TIAA Institute indicates that a significant portion of the population, about 1 in 4 Americans, is...
February 22, 2024 -
`
Lenny Kravitz Reveals ‘Bromance’ With Jason Momoa After Lisa Bonet Divorce
There are arguably very few stories that resonate with warmth and unity like that of Lenny Kravitz, Lisa Bonet, and Jason...
February 17, 2024 -
`
Mastering the Art of Sales: Strategies for Thriving in Any Economic Climate
In the fast-paced world of business, rumors about an impending recession can often stir anxiety among entrepreneurs. While the validity of...
February 9, 2024 -
`
6 Effective Ways to Future-Proof Your Business
Today, the concept of future-proofing your business has moved from a strategic advantage to a fundamental necessity. To future-proof means to...
February 3, 2024 -
`
Corporate Whistleblowers: Navigating the Legal Challenges
In the complex world of employment, encountering ethical dilemmas is more common than one might think. Imagine you’re working at a...
January 23, 2024 -
`
Barry Keoghan’s Triumphant Rise: From a Life-Threatening Infection During Filming to Oscar Glory
From the brink of losing his arm to the bright lights of the Oscars, Barry Keoghan’s journey is more than just...
January 21, 2024
You must be logged in to post a comment Login