A 0% balance transfer offer can look like an easy way to save money, but the introductory rate is only part of the story. Transfer fees, the length of the promotional period and the APR after the offer ends can all affect what you actually save. Before you move a balance, do the math.
Quick Answer: A balance transfer can be worth it when the interest you save exceeds the transfer fee and other costs. Compare the transfer fee, promotional APR period, regular APR afterward, and how quickly you can repay the balance before deciding.
How a Balance Transfer Works
A balance transfer lets you move debt from one credit card to another, usually to take advantage of a lower introductory APR. Some cards offer a 0% introductory APR for a set period, which can give you time to pay down the balance without additional interest. However, most balance transfers charge a fee based on the amount you transfer.
Is a Balance Transfer Actually Worth It?
It depends on how much interest you can avoid compared with the cost of the transfer. A 0% introductory APR does not necessarily mean the transfer is free. If the card charges a balance transfer fee, that cost starts on day one.
For example, transferring a $5,000 balance with a 3% transfer fee would cost $150. The question is whether the interest you could avoid during the introductory period is greater than that $150 cost.
The 3 Numbers You Should Compare
1. Balance Transfer Fee
Balance transfer fees are commonly calculated as a percentage of the amount transferred. Even with a 0% introductory APR, this fee increases the amount the transfer costs you. Compare the fee in dollars—not just the percentage—before deciding.
2. Length of the Introductory APR Period
The longer the introductory period lasts, the more time you have to pay down the transferred balance before the regular APR applies. Divide your balance by the number of months in the promotional period to see what monthly payment would be needed to pay it off in time.
3. APR After the Introductory Period
If you still have a balance when the introductory period ends, the card’s regular APR will apply to the remaining balance. Check that rate before transferring—not after. A balance transfer works best when you have a realistic plan to pay down the debt during the promotional period
Do the Math Before You Transfer
A simple way to evaluate an offer is to compare the balance transfer fee with the interest you could potentially avoid. Then determine whether you can realistically pay off the transferred balance before the introductory period ends.
Example: $5,000 Balance
Suppose you transfer a $5,000 balance to a card offering a 0% introductory APR for 18 months with a 3% balance transfer fee. The transfer fee would be $150, making your starting balance $5,150.
To pay off $5,150 within 18 months, you would need to pay about $287 per month. That gives you a much clearer number to work with than simply seeing “0% APR” in an advertisement.
Ready to Run Your Own Numbers?
Every balance transfer offer is different. Before deciding, plug in the numbers from the offer you received and see what the transfer could actually cost.
Before You Decide
A balance transfer can be useful when the savings outweigh the fee and you have a realistic plan to pay down the balance. Don’t focus only on the 0% introductory APR. Compare the transfer fee, promotional period, ongoing APR and the monthly payment you’ll need to stay on track.
Related reading: Learn what happens when a 0% balance transfer offer ends.