The economic squeeze is pushing more people into credit card debt. For 52.97% of Americans, housing costs now take over half their monthly salaries — leaving less for other crucial expenses. “There’s an increasing gap between what life costs and what people can earn in their jobs,” says Bobbi Rebell, certified financial planner and author at CardRates.com.

This trend is reflected in recent data. About 83% of Americans say they prioritize paying off credit cards this year, while 22% have missed a payment in the last six months. These statistics highlight the growing need for debt assistance.

If you need debt relief to improve your finances, you have options such as balance transfers and debt consolidation loans. But which is best right now? Here’s what experts say to make the right choice for your situation.

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Is a balance transfer or debt consolidation better right now? Experts weigh in

“Balance transfers are ideal if you have good credit and can qualify for 0% introductory offers,” says Mel Abraham, money mentor and bestselling author of Building Your Money Machine. 

These offers pause interest accumulation as you pay down your balance. On the other hand, debt consolidation through a personal loan might be better if you have multiple debts on high-interest credit cards and want to simplify payments.

When a balance transfer could make sense

To help you understand when a balance transfer could be beneficial, Abraham shares this scenario:

Imagine you have $15,000 in credit card debt spread across four cards, with an average interest rate of 22%. You’re considering a balance transfer to a card with a 0% annual percentage rate (APR) for 18 months and a 3% transfer fee.

Here’s the breakdown:

• Transfer fee: $450 (3% of $15,000)

• Monthly payment to clear the balance: Approximately $861 (divide the total amount by 18 months to avoid interest)

• Total paid over 18 months: $15,450 ($15,000 + $450 fee)

In this case, you’d save all the interest you would’ve paid at 22% APR, minus the $450 transfer fee. But you’d need to commit to high monthly payments of $861 to clear the balance before the promotional period ends.

This scenario shows the key pros and cons of balance transfers:

Takeaway: A balance transfer can save you money if you can afford higher monthly payments and pay off debt within the promotional period.

Find out how the right debt relief strategy could help you today.

When debt consolidation could make sense

Now, let’s look at another scenario from Abraham to see when debt consolidation could be smart.

Imagine you have the same $15,000 in credit card debt across four cards, with an average interest rate of 22%. But instead of a balance transfer, you’re considering a debt consolidation loan with a 7% interest rate over 5 years.

Here’s the breakdown:

• Loan amount: $15,000

• Interest rate: 7%

• Loan term: 5 years

• Monthly payment: Approximately $297

• Total paid over 5 years: Approximately $17,820 ($297 x 60 months)

In this case, you’d pay more overall due to interest, but your monthly payments would be much lower than with a bank transfer — and more manageable for your budget.

This scenario shows the key pros and cons of debt consolidation:

Takeaway: Debt consolidation can be wise if you need lower monthly payments and more time to pay off your debt. However, the total interest paid could be higher due to the extended repayment period.

The bottom line

When choosing between a balance transfer and debt consolidation, think about your timeline and credit score. “Balance transfers are relatively inexpensive but short-term — usually 18 months or less. Then, the rate goes back up to the market rate,” says Kelly Johnson, senior vice president of commercial banking at Sonata Bank.

Protecting your credit should be your top priority when tackling debt. Johnson advises not waiting until all your cards are maxed out and you’re struggling with payments. “[This] will negatively affect your credit score, limiting [your options],” he said.

If you’re leaning toward a debt consolidation loan, prepare for a thorough review process. According to Johnson, you can expect lenders to examine your credit history, verify your income and evaluate your ability to manage monthly payments.

Finally, don’t forget to look into other financial debt relief strategies such as earning extra income from a flexible part-time job or seeking debt settlement or credit counseling.