Many banks and financial institutions offer credit cards with introductory low or 0% balance transfer rates, but only a limited number of providers allow you to balance transfer personal loan debt to a credit card.
Read our guide to learn how to compare balance transfer credit cards that accept personal loan debt. We also cover the steps you need to take to transfer your personal loan debt to a credit card and key factors to consider when searching for the right card to pay off your debt.
What are the benefits of transferring a personal loan balance to a credit card?
Save money. Balance transfer credit cards give you a chance to save money on interest charges by offering a low or 0% introductory interest rate for a specified time period.
Pay off your personal loan debt faster. Paying low or zero interest on a balance transfer credit card means that more of your repayments go directly towards your principal debt – rather than interest charges. This gives you a chance to focus on paying off your actual debt in a shorter amount of time.
Longer balance transfer offers. Balance transfer credit cards offer introductory interest rates for up to 12 months (or sometimes longer). Depending on the amount of debt you owe and the repayments you can afford to make, you may even be able to pay off your personal loan debt before the introductory period ends, avoiding any additional interest charges in the process.
Pay off all your debts at once. If you’re dealing with several debts, you may be able to consolidate all of them onto one credit card so that you can focus on making one repayment each month. This way, you’ll only have to deal with one interest rate for all of your debt.
Types of credit cards that allow balance transfers from personal loans
While not all credit card providers will allow you to transfer your balance from a personal loan to a credit card, the types of cards available may include:
No annual fee credit cards. Some credit cards offer no annual fees, allowing you to save money on additional card fees when you balance transfer your personal loan to a new credit card.
Low rate credit cards. These cards provide a low standard variable interest rate for purchases, which can help you save money on charges for new purchases. Keep in mind that this low rate will likely not apply to any existing debt you move over from your personal loan. Only new purchases that you put onto the card tend to receive the low variable interest rate.
Rewards credit cards. These cards offer reward points and travel rewards points per dollar spent on new purchases. If you choose a rewards card for your balance transfer, remember that new purchases will accrue interest, which could mean that it will take you longer to pay off the personal loan debt. Generally, it’s ideal to pay off your balance transfer debt before making any additional purchases on the card.
Premium credit cards. If you’re interested in the benefits and status of a gold and platinum credit card, you may additionally be offered exclusive benefits like travel insurance, concierge services and airport lounge access. These cards usually come with annual fees, so be aware of this additional cost when trying to pay off your debt.
How can I make sure I’m eligible to transfer my personal loan to a credit card?
The requirements you’ll need to meet will likely vary between credit cards, but generally include the following:
Meet the credit card application criteria. You’ll need to meet the eligibility criteria for the specific credit card you’re applying for, including the minimum age, Canadian residency status, credit score requirements, as well as the minimum income requirements.
Request a balance transfer from eligible accounts. You’ll likely only be eligible to balance transfer existing debts if they are from a different Canadian financial institution from the one you’re applying to. This is because banks won’t compete with themselves to offer you a low or zero interest rate when they are already offering you products for a fee.
Make sure the debt is in your name. The name for your credit card and balance transfer debt must match. This means you cannot request a balance transfer from an account held by someone else, such as your partner. Check out this guide for options that allow balance transfers from a spouse or partner.
Check the balance transfer limits. There may be minimum and maximum limits for your balance transfer. For example, some providers will only allow you to balance transfer up to a certain percentage of your debt. Others may limit the amount of debt you can transfer in relation to the credit card limit. This means if you were approved for a credit card with a $10,000 limit and allowed to balance transfer up to 80% of your debt, you could transfer up to $8,000 of debt to the account.
How to request a balance transfer from a personal loan to a credit card
Once you have compared credit cards and found one that suits your needs and allows you to transfer a personal loan debt, you can request a balance transfer when you apply for the card. This process usually varies slightly between credit card companies, but generally there is a section in the application that asks you to provide details for any balance transfer requests. Here, you’ll typically need to include details of the debt or debts you want to transfer, including:
The name on the account
The type of card or account (i.e. personal loan)
The account number
The amount of debt you’re transferring
The name of the bank or provider your current debt is with
If your application is approved, you should get your new credit card in seven to ten business days. Depending on the provider, you may need to activate the card so that the credit card company can begin the balance transfer process, which can also take a few additional days. Once the balance transfer is complete, you can close your old account and start paying off the debt on your new credit card.
What should I be wary of when transferring my debt?
Balance transfer fees. Some credit cards charge a one-time fee for processing balance transfers. This fee depends on the balance transfer offer and the provider, but is usually between 1% to 3% of the total debt you transfer. It can, however, reach as high as 5%, which can add a large fee onto your already existing debt.
Fees and charges on your old account. Since the balance transfer process can take a couple of weeks to complete, you’ll need to continue making payments on your existing account/s until the debt is transferred.
The revert rate. At the end of the introductory period, the low promotional interest rate for balance transfers will revert to a standard variable rate. This is usually the standard cash advance rate for your card, so aim to pay off your balance before this rate applies.
Keeping your old account open. Once the debt is transferred to your new credit card, ideally you should close the old account to avoid any additional fees or charges.
Making purchases during the introductory balance transfer period. If you use your new balance transfer credit card to make purchases, the standard purchase rate will apply to those charges, and any repayments you make will be allocated to these debts before your balance transfer debt. This is because new purchases come at a higher cost with the revert interest rate and credit card providers are required to allocate your repayments to pay off the more expensive debts first. If that happens, you could end up carrying the balance until after the introductory period ends, so try to focus on paying off your existing debt before using your card for additional purchases.
Offering low or 0% interest for a specified introductory period, balance transfer credit cards give you a chance to pay down your existing debt faster without worrying about paying high interest fees. While not all providers will allow you to transfer debt from a personal loan, reach out to providers and find out what your options are and find one that suits your needs.
Frequently asked questions on balance transferring a personal loan to a credit card
The type of account you use for debt consolidation depends on your individual circumstances. However, you may want to note that debt consolidation loans generally provide a fixed interest rate that is applied from the time the loan is approved.
Balance transfer credit cards, on the other hand, provide a low or 0% introductory interest rate before standard rates are applied, which can give you an interest-free period. The idea with balance transfer credit cards is to focus on paying down your debt in the zero or low interest period so that you don’t face any additional charges.
Before deciding on the best option for you, consider comparing a range of loan and credit card options to find one that suits your personal circumstances.
Not necessarily. Usually if you miss a repayment, you will be charged a late payment fee. Your promotional rate may continue to run until its expiration date, however if you make it a habit of missing payments, your promotional rate may be discontinued. Read the small print on your agreement to make sure you understand the implications of a missed payment.
If you successfully balance transfer your personal loan to a credit card, that debt will be considered as credit card debt.
Amy Bradney-George is the acting editor for Finder X and a senior writer for credit cards and Finder Green. She has more than 13 years' experience as a journalist and writer, with bylines in publications including The Equity Magazine, The Sydney Morning Herald, ABC News and produce industry website FreshPlaza. Amy has a Bachelor of Arts in Journalism and Drama from Griffith University, and when she’s not putting (virtual) pen to paper, she spends her time as an actress.
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