Americans carried a staggering $1.18 trillion in credit card debt in the first quarter of 2025, according to Motley Fool Money research. But if you’re carrying some credit card debt, fear not — there are plenty of ways to get rid of it.

Two of the best ways to tackle debt are balance transfer credit cards and personal loans. Both can help you save a lot of money in interest, but they’re designed for different financial situations.

Here’s how to choose the right tool for your debt payoff strategy.

How a balance transfer works

A balance transfer credit card lets you move your existing credit card debt to a new card with a 0% intro APR, often for 12 to 21 months. During that period, you won’t pay any interest on your transferred balance.

For that reason, balance transfer cards are a fantastic option — if you’re confident you can pay off your debt within the promo window. Just make sure you don’t carry a balance beyond that 0% window or else the card’s higher interest rate will kick in.

You’ll usually need a “good” credit score — 670 or higher — to qualify for a balance transfer card, and you’ll need to pay an upfront fee of 3% to 5% of the transferred balance. Still, that’s probably a lot less than the interest you’d have to pay, so it’s almost always a valuable tradeoff.

Ready to cut down on interest? Check out for our very favorite 0% intro APR credit card to start saving today.

How a personal loan works

A personal loan is another viable debt payoff option. Personal loans give you a lump sum of money upfront which you can use in all sorts of ways — including paying off existing debt. Then you repay the loan in fixed monthly payments over a handful of years, usually two to seven.

Unlike balance transfer cards, interest starts accruing immediately, but your interest rate and monthly payment won’t change. In May 2025, the average APR on a two-year loan was 11.57%, according to the Federal Reserve — much lower than credit card APRs, which are usually 20% or higher.

A personal loan offers versatility, too. You can use it to cover plenty of other things, like a large expense or unexpected emergency.

On the downside, many personal loans charge origination fees, usually 1% to 10% of the amount borrowed. Your interest rate is also tied to your credit score, so if your credit isn’t strong, you may not get a great rate.

Still, for those who want lower interest over a longer period of time, a personal loan is the way to go.

Looking for a clear payoff plan? Compare our top debt consolidation loans to find the right fit for your budget today.

Which one is right for you?

Choosing between a balance transfer versus a personal loan comes down to your repayment timeline and credit profile.

Ask yourself:

• How much do I owe? Loans can generally cover bigger amounts than balance transfer cards. Check the limit on any cards you’re considering to be sure.
• How fast can I pay it off? Within 12 to 21 months? A balance transfer may save you more. Need more time? A loan’s longer term may be a better fit.
• What’s my credit score? 670 or higher? You likely qualify for both options. Below 670? A personal loan might be more accessible (but watch out for predatory lenders).
• How do I manage spending? Disciplined with your spending? A balance transfer could be ideal. Struggle to stay out of debt? A personal loan will help you avoid more spending.

Bottom line

If you have strong credit and can repay your debt within the initial promo window, a 0% intro APR balance transfer card is your best bet. On the other hand, if you want lower interest rates than a typical credit card, along with a longer payment period, a personal loan is the way to go.

But the big takeaway here is there’s no one-size-fits-all way to get rid of debt. The best tool will always be the one that fits your budget, habits, and timeline.

Austin and his wife are worried about moving to a single-income household while supporting two kids. Should they free up cash flow by paying off a car loan, or tighten up and stay the course?

Paul has been retired for seven years, but still can’t shake his anxiety about not having enough. Is there a good way to know when he’s finally escaped the dreaded sequence of returns risk?

Jonathan wants to build up his taxable brokerage account, but he’s having trouble letting go of the tax benefits of a Roth IRA. How does he get past his psychological hurdles?

Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.

Enjoy!

P.S. Got a question? Leave it here.

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Austin asks (at 01:45 minutes):    We’re at a big transition point—our second child just arrived, and we’re moving to a single income. What are your thoughts on our plan to free up some much-needed cash flow as we make this move?

I’m 31, my wife is 29, and we have two kids. We’ll earn $150,000 plus a $20,000 bonus on our single income. We have $52,000 in emergency and sinking funds, and our monthly spending is $7,000.

Our investments include $500,000 in retirement accounts, $150,000 in a taxable brokerage account, and $12,000 split between two 529s.

Our home is worth between $560,000 and $575,000. We owe $390,000 on a 5.07 percent ARM, which won’t adjust until late 2029. We also have $20,000 in federal student loans at 4 percent and a $16,000 car loan at 5.97 percent, with a $570 monthly payment.

We’re expecting a $5,000 windfall from a vacation payout and some bonuses, which leads to my question: Should we put that toward paying off the car loan to improve monthly cash flow? That $570/month would go a long way during this transition.

The complication is that we have another car. It’s fully paid off and running strong at 260,000 miles. I love this car and hope it makes it to 300,000, but realistically, we’ll need to replace it in the not-too-distant future.

We’d likely spend $18,000 to $27,000 on the next vehicle. So, should we keep managing the current car loan while saving for the next car? Or even dip into taxable investments to pay this one off?

The thought of selling from our taxable brokerage is the part that stings the most. But it feels like we wouldn’t get another used car loan below 6 percent in today’s market. Would it be smarter to free up the $570 now and start rebuilding savings for the next car purchase, or just ride this out?

Paul asks (at 25:19 minutes):      We often talk about sequence of returns risk, but how do you know when you’ve escaped it? I’m 59, and my wife is 52. I’ll turn 59½ this July and get full access to my retirement accounts without penalty.

We have $3.3 million across our accounts: my traditional IRA has $1.6 million, my Roth IRA has $700,000, my wife’s Roth IRA holds $384,000, and her SEP IRA has $480,000. We also have $54,000 in a brokerage account, $61,000 in cash, and we own our home outright.

I left work in 2018 at age 52, when we had $1.7 million between investments and cash. My wife no longer works either. Our annual spending is $70,000.

So, how do we know when we’re safely past the point of worrying about sequence of returns risk? When can we just exhale and know that we’ll be okay?

Jonathan asks (at 41:34 minutes): How do I decide between making the more mathematically sound decision and the more psychologically comfortable one?

I’ve contributed enough to my Roth and pre-tax retirement accounts that, based on growth projections, I won’t need to add anything else. This frees me up to invest $7,000 a year for at least the next decade, with the goal of accessing that money before 59½.

I have two main options: Contribute to a Roth IRA and later withdraw the contributions tax-free, or invest in a taxable brokerage account. From a pure tax perspective, the Roth is better.

But psychologically, I know I’ll struggle with pulling money out of it. Even if I’m just withdrawing contributions, it just feels wrong to touch it.

So, do I go the taxable route, accept the slightly higher tax bill, and avoid the mental hurdle? Or do I use the Roth and reframe how I think about those dollars? How should I approach this tradeoff between psychological comfort and tax efficiency?

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Rachel Rodgers graduated from law school with $330,000 in student loans. Her starting salary? Just $41,000.

Most people would have accepted this crushing debt-to-income ratio. They’d slowly chip away at payments for decades. Rodgers had a different plan.

She deferred her loans and started her own virtual law practice in 2008 — during the recession, when jobs were scarce and most lawyers were struggling to find work.

Her mom thought she was crazy.

Her first year, she made around $65,000 in gross revenue with only $300 in overhead costs. By year two, she was earning $300,000.

The key to her success wasn’t cutting expenses or living on rice and beans. Rodgers focused entirely on earning more money.

We talk about the practical steps she took to scale her business.

She waited until hitting $250,000 in annual revenue before bringing on her first full-time employee — an administrative assistant who immediately paid for herself by responding to client inquiries faster than Rodgers could manage alone.

Rodgers also shares insights from a CEO’s perspective on what employees should know when asking for a raise.

Understand your company’s goals. Know your boss’s pain points. When you spot a problem, bring three solutions — not just the issue. She usually goes with whatever option her team recommends.

“You are the asset,” she explains. This mindset applies whether you’re an entrepreneur or an employee trying to maximize your career potential.

Our interview covers her transition from solopreneur to multimillion-dollar business owner, her approach to leading employees, and her philosophy on building wealth through entrepreneurship rather than cost-cutting.

Timestamps:

Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.

(0:00) Introduction

(2:00) Rachel’s $330,000 debt with $41,000 salary

(5:35) Why earning more beats cutting expenses

(6:40) Starting solo law practice during 2008 recession

(9:13) Hitting $300,000 revenue in year two

(11:00) Debt payments versus business reinvestment

(14:20) Small Business Bodyguard digital product success story

(21:00) Virtual law offices and perfect timing decisions

(24:30) Taking calculated risks

(39:00) Financial independence and Fat FIRE goals

(46:00) When to hire employees

(53:00) Why opportunity costs matter more than expenses

(57:00) Being invaluable employee from boss POV

(1:11:00) Salary negotiation tactics

(1:19:00) Building relationships with remote team members

(1:21:00) Launching adult kids into financial independence

 

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