A balance transfer loan is a simple way to pay down your credit card and high-interest debt. If you get a balance transfer loan, you'll list the creditors you’d like to pay and how much each one should get. All the money you didn't use to pay debt goes into your bank account.
How balance transfer loans compare
A balance transfer loan can help reduce your current debt by paying your creditors directly, and any money left over goes to your bank account. Balance transfer loans typically have a lower annual percentage rate (APR) than cash loans.
A balance transfer loan is also different from a balance transfer credit card because the loan has fixed terms, which means your APR and monthly payment don't change. Unlike a credit card, it’s not revolving debt, so you have a clear payoff date and payment plan.
Unlike balance transfer loans, a cash loan deposits the entire amount into your bank account. If you want money to make a large purchase, this may be a better option.
Some balance transfer loans have a set minimum and maximum amount to pay your current debts. Although there may be a minimum and maximum, you can pay your creditors any amount between those numbers.
Which creditors you can pay
Your balance transfer loan can pay off up to 12 different creditors. The best way to see if you can pay a creditor is to sign in to your account, go to your To-Do List, and enter their name. If your creditor doesn’t show up, it’s likely they can’t be paid directly.
Some credit cards are under a different name than the one shown on the card. For a list of potential credit card names, check out our Help Center article about setting up balances to transfer.
A balance transfer loan can’t be used to pay:
- Mortgages
- Auto loans
- Student loans
How long it takes
It takes several days for the money to be sent to your creditors. Keep making your regular payments until the creditor confirms that you paid down your debt. Doing that helps prevent late fees and extra charges. Typically, you’ll receive a refund for anything you’ve overpaid to your creditor. Here's how long it takes to pay your creditors:
| Electronic payment | 3–5 business days |
| Check payment | 5–10 business days |
| Payment processing | Additional 1–3 days |
Your accounts with your previous creditors will stay open, even though they get paid directly. If you want to close your account with their service, you'll need to contact them directly.
Your Truth in Lending disclosure shows the creditors you paid and how much each one got. It also shows how much of your loan went to your bank account. To view your Truth in Lending disclosure, sign in to your account.
Related articles
Setting up which balances to transfer