Can You Do A Balance Transfer From A Line Of Credit

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If you're looking to pay off personal loan debt, residual transfer credit cards at 0% annual pct charge per unit could sound appealing. Merely can you transfer a personal loan to a balance transfer card?

Personal loans can have interest rates every bit high as 35.99%, causing you to pay far more than you initially borrowed. And while it is possible to move a personal loan to a balance transfer card, not all credit carte issuers let it. Plus yous'll want to consider additional factors similar balance transfer fees and length of offering periods earlier deciding how to handle your debt. If y'all do your homework, you lot could utilize a residue transfer card and save money.

Tin You Pay Off a Personal Loan with a Balance Transfer Credit Carte?

With a residue transfer credit bill of fare, you can move your high-interest debt to a card with a depression APR. Some of these cards give you near two years at 0% Apr, so you can pay off your debt without accruing interest.

Pro Tip

Shop around for a residual transfer card. In that location are now many more than on the marketplace, offering promotional APRs that last for vi to 21 months.

Although balance transfers commonly involve moving balances from ane credit card to another, you tin sometimes move a personal loan to a remainder transfer card, says Stella Shon, a credit cards writer with The Points Guy. (Similar NextAdvisor, The Points Guy is owned by Red Ventures.)

"Information technology'southward definitely possible to do so, and with the enticing 0% Apr offers, information technology makes a lot of sense for many cardholders," Shon says.

That may be surprising to hear, as many companies don't advertise that you can pay off personal loans with balance transfer cards. "I think balance transfers are intended for debt already on an existing card rather than personal loans," said Shon. "Personal loans aren't the main intention of residuum transfers."

Non all credit card companies permit balance transfers of loans, but several do. For example, Bank of America and Upper-case letter One take linguistic communication on their websites confirming customers can transfer some loans onto a residuum transfer credit card. Discover also allows cardmembers to transfer balances from well-nigh major credit cards and bank-originated loans, according to an emailed statement from Gaurav Sharma, Notice senior vice president of acquisition marketing.

How to Pay Off a Personal Loan With a Balance Transfer Credit Card

Although it is possible to move a personal loan to a balance transfer card, the procedure works a fleck differently than moving a residual between credit cards. It usually involves a residuum transfer check, says Matt Schulz, master credit annotator with LendingTree.

"As far as how a transfer typically works when it comes to transferring a personal loan, at that place are likely a few options," he said. "Information technology can be done with a and so-called residue transfer check, which the cardholder would make out to the lender of the loan they desire to transfer. You tin can also likely do the transfer online or over the telephone likewise."

A balance transfer check works like a personal check, except the money is pulled from your new line of credit. The credit card company sends you the check in the mail, and you can deposit the amount in the banking company and use it to pay off your personal loan.

The Pros and Cons of Transferring a Personal Loan to a Credit Carte

Before transferring a personal loan to a balance transfer credit card, make certain you weigh the pros and cons:

Pros

Potentially save a meaning amount of money
A residue transfer can help you become debt-free faster
Simplified repayment

Cons

Balance transfer fees
High Apr after the introductory offer expires
Doesn't solve the root cause of debt
There may be additional stipulations and limitations

Pro: You Could Potentially Save a Meaning Amount of Money

Using an interest-gratuitous credit card to pay off a personal loan could be a smart idea.

"If yous tin can take advantage of a 0% balance transfer, you could relieve a good corporeality of money in interest by moving a personal loan to a balance transfer card," Schulz says. "How much you tin can save depends on how large the loan is, how high the interest rate is, and how much time you have left on the loan, but you could save a pretty large amount of money."

How much can you save? Consider this example.

Larry has a $5,000 personal loan at 9% interest with a iii-year fourth dimension line. Under his electric current repayment terms, his monthly payment is $159 per month, and his total repayment cost over three years would be $five,724.

Larry applied for a residuum transfer bill of fare and qualified for 1 that had an introductory offering of 0% April for xviii months. The carte had a iii.00% balance transfer fee, which added $150 to his balance.

If he kept making the same monthly payment he had earlier — $159 — he'd pay off his debt in 33 months and pay a total of $five,400.08 — a savings of $323.86.

If he increases his payments to pay off the debt inside the promotional offering period, he volition pay $127.11 more per month, bringing his monthly payment to $286.xi. If he went with this approach, he'd repay merely $five,150 — the amount of the transferred balance and balance transfer fee — and no interest.

Pro: You Could Become Debt-Gratuitous Faster

If y'all paid off your debt within the introductory period, you'd salvage money, and you'd also be out of debt much faster. In the above example, Larry would have to increase his payments to $286.11 to pay off his debt inside the promotional flow. By doing that, he'd pay off his debt 18 months earlier than originally scheduled.

Eliminating debt can amend your credit and permit y'all to pursue other financial goals, like boosting your retirement savings charge per unit.

Pro: You lot Can Simplify Your Repayment

If you have multiple forms of debt, such as personal loans and several credit cards, keeping rails of multiple payments and due dates can be overwhelming. By taking advantage of a remainder transfer, you can simplify things.

"Balance transfers tin even let you consolidate multiple debts that you have and streamline your finances," said Schulz.

Con: Balance Transfer Fees

When deciding if a balance transfer is right for you, make sure you account for rest transfer fees. Balance transfer fees are usually 3% to five% and are calculated based on the amount you transfer over. Depending on the amount of debt you transfer and the fee, information technology could reduce the effectiveness of the transfer.

Con: Loftier April After the Introductory Offer Expires

In full general, credit cards have much college APRs than personal loans. The average Apr for personal loans was 10.28% as of Jan 31, according to Bankrate. For the same time period, the average April for credit cards that assessed interest was sixteen.44%.

"If you lot open a balance transfer credit card, make sure you lot pay information technology off during the introductory menstruation," advises Shon. "Otherwise, involvement rates will exist so high your debt will be fifty-fifty more astronomical."

Con: A Transfer Doesn't Solve the Root Cause of Debt

Although a residual transfer tin be a helpful tool, it doesn't solve what got y'all into debt in the first place. Without addressing that problem, you could just worsen the event and cease up even more in debt.

Con: May Be Additional Stipulations and Limitations

Not all credit carte issuers permit you to use a balance transfer carte du jour to pay off a personal loan, or they may non permit yous to utilize the menu to pay off a loan from the same bank.

"For example, if you accept a loan from Citi, yous can't transfer that to a Citi credit card," says Shon. "Instead, yous accept to find a different banking company or nonaffiliated bank for that transfer."

To discover out if you tin can transfer a personal loan to a balance transfer credit bill of fare, contact the card issuer directly.