Is a Balance Transfer Worth It? Compare the Fee and Payoff Time
Compare a balance transfer fee, promotional period and monthly payment before moving credit card debt. Includes a worked example.
A balance transfer may save money if the fee and any interest on the new card are lower than what you would pay by keeping the debt where it is. Work out what you can pay before the promotional period ends and what any remaining balance would cost.
Read the offer before moving the balance
Write down the transfer fee, the promotional APR, the date it ends, and the APR that applies afterward. Check whether the rate covers transfers, purchases or both. The CFPB notes that a 0% offer can still charge a transfer fee.
A credit limit may prevent you from moving the whole balance. Keep paying the original card as required until the transfer posts and you can see what remains due.
Put the fee and the deadline in the same calculation
Say you transfer $4,000 with a 3% fee added to the balance and 15 months at 0% APR. The fee is $120. With no purchases, extra fees or interest, you would need about $275 per month to clear $4,120 by the end.
If you can pay only $225 a month, you would pay $3,375 over 15 months and have about $745 left. Check what rate applies to that amount after the promotion. If your payment schedule allows it, aiming to finish a cycle early gives you room for timing differences.
Compare the same monthly payment on both cards
Estimate the interest on the existing card using the same $225 or $275 monthly payment. Compare that estimate with the transfer fee plus any interest you expect to pay after the promotion. Include fees, new purchases and the actual expiration date when they affect your numbers.
If the offer says “no interest if paid in full,” check whether it uses deferred interest. That can mean interest accrues during the promotion and becomes payable if you don’t meet its terms. If you’re already struggling with required payments, start with your issuer and a realistic budget.