How Much Can a 0% Balance Transfer Save You?
A 0% balance transfer can potentially save hundreds or even thousands of dollars in credit card interest, but the actual savings depend on your balance, current APR, transfer fee and how quickly you repay the debt. Here’s how to run the numbers before you transfer a balance.
Start With Your Current Credit Card Interest
The higher your current APR, the more potential value a 0% balance transfer may provide. For example, a $10,000 balance at 24% APR can generate substantial interest if it takes a year or more to repay. Moving that balance to a 0% introductory offer can temporarily stop interest from accumulating, but you still need to account for the balance transfer fee.
Example: Transferring a $10,000 Balance
Suppose you have a $10,000 credit card balance at 24% APR and are considering a card offering 0% introductory APR for 18 months with a 3% balance transfer fee. The transfer fee would cost $300. From that point, the question becomes simple: will the interest you avoid by transferring the balance be greater than the $300 fee?
Your Repayment Speed Changes the Savings
How quickly you repay the balance makes a major difference. If you could pay off the original card within a few months, you may pay relatively little interest and the transfer fee could reduce much of the benefit. If repayment will take a year or longer, however, avoiding a high APR for an extended period could produce much larger savings.
Don’t Ignore the Balance Transfer Fee
Balance transfer fees are commonly charged as a percentage of the amount transferred. On a $10,000 balance, a 3% fee costs $300 and a 5% fee costs $500. That fee is effectively the upfront cost of making the transfer, so subtract it from the interest savings when deciding whether the offer is worthwhile.
What Happens If You Don’t Pay It Off During the 0% Period?
If you still have a balance when the introductory period ends, the remaining amount will generally begin accruing interest at the card’s regular APR. Before transferring a balance, check what that APR will be and estimate how much of the balance you can realistically repay during the 0% period. A longer introductory period is most valuable when you use the extra time to reduce the debt.
How to Calculate Your Potential Savings
Start by estimating how much interest you would pay if you kept your current card for the amount of time you expect to carry the balance. Then compare that amount with the balance transfer fee and any interest you might pay after the introductory period ends. The difference gives you a better estimate of your potential savings than simply focusing on the 0% advertised rate.
Use the Ready Steady Go Calculator
Instead of guessing, you can use our offer calculator to compare the numbers. Enter the balance, APR, introductory period and transfer fee to estimate the potential cost of an offer before you make a decision.
The Bottom Line
A 0% balance transfer can create meaningful savings when the interest you avoid is greater than the transfer fee and you use the introductory period to pay down the balance. Compare the numbers based on your actual balance, APR and repayment plan. The goal isn’t simply to move the debt—it’s to reduce what the debt costs you.