Balance Transfer Calculator: Is a 0% Card Worth It?
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A balance transfer moves card debt to a new card with a low or 0% introductory rate, for a fee of usually 3% to 5%. It saves money when the interest you avoid is more than the fee.
You would still owe $1,040 when the promotion ends, and it would then be charged 22.99%. Paying more each month would cut that.
Moving $8,000 to a card with 0.00% for 18 months and a 3.0% fee ($240) means $38 in interest plus the fee, $278 in all. Staying put costs $2,455. You come out $2,177 ahead.
Compare the two plans
| Stay | Transfer | |
|---|---|---|
| Starting balance | $8,000 | $8,240 |
| Interest | $2,455 | $38 |
| Transfer fee | – | $240 |
| Total cost | $2,455 | $278 |
| Months to pay off | 27 | 21 |
| Total paid | $10,455 | $8,278 |
Show the steps
- Transfer fee: $8,000.00 × 3.00% = $240.00, added to the new balance of $8,240.00.
- For 18 months interest is 0.00%. After that it is 22.99%.
- Staying: $8,000.00 at 24.99% with $400.00 a month takes 27 months and costs $2,455.26 in interest.
Compare total cost
Cost of staying = interest paid at the current APR
Cost of transferring = interest at the promo and later rates + transfer fee
- A new purchase on the transfer card can be charged a different rate. Pay by the due date every month, because a late payment can end the promotional rate.
- Opening a new card can lower your credit score a few points for a while.
Estimates for planning and learning, not financial, tax, legal or medical advice. Check figures with your lender, tax preparer or doctor before you act.
About this calculator
A 0% balance transfer card can cut the cost of paying off credit card debt, but the fee, the length of the promotion and the rate afterward all matter. This calculator runs both plans month by month and compares the total cost.
It assumes you pay the same amount each month either way. If the promotion ends before you finish, the remaining balance is charged the regular rate.
How to use it
- Enter the balance you want to move and your current card’s APR.
- Enter the monthly payment you can make.
- Enter the new card’s transfer fee, promotional rate, promotion length and the regular APR that follows.
- Compare the total cost and the savings of both plans.
When a transfer makes sense
It works best when you can pay off most of the balance during the promotion, when the fee is about 3% or lower, and when you will not add new purchases to the old or new card. It works poorly if you only make small payments, because the leftover balance returns to a high rate.
Watch for
- A late payment that cancels the promotional rate.
- A higher rate on new purchases.
- The fee being added to the balance, so you pay interest on it too.
Sources
Quick check: test yourself
A 3% balance transfer fee on $5,000 costs…
Correct answer: $150. $5,000 × 0.03 = $150.
What happens when a 0% promotion ends and you still owe money?
Correct answer: The regular APR applies to what is left. You pay the card’s regular APR on the remaining balance.
To get the most from a 0% transfer, you should…
Correct answer: Pay off as much as you can before the promotion ends. Paying down the balance during the 0% period saves the most interest.
Pick an answer for each question.
Common questions
How does a balance transfer work?
You apply for a new card and ask it to pay off your old balance. You then owe the new card, often at 0% for a limited time.
What is a balance transfer fee?
A fee of usually 3% to 5% of the amount moved, added to your new balance.
What if I do not pay it off in time?
The remaining balance is charged the regular rate once the promotion ends.
Does a balance transfer hurt my credit?
A new card causes a small, usually short-lived dip in your score from the hard inquiry. A lower balance can help over time.
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