Does moving the balance pay for itself
A balance transfer moves credit card debt to a new card with a 0% promotional rate, for a fee. Whether it is worth it comes down to one comparison: the fee against the interest you would otherwise pay during the promotional months. This calculator gives both.
The formula
Worked example: $5,000 at 3% fee, from a 22% card, 18-month promotion
- Transfer fee: $150
- Interest the old card would charge over 18 months: $1,650
- Net saving: $1,500
The saving depends on how fast you were going to pay
The $1,650 assumes the balance sits untouched for 18 months. If you were going to pay it down evenly over the same period, the old card would have charged about $870, and the net saving falls to about $720. Still worth it — but a third of the headline figure.
| What you would have done | Interest on old card | Net of $150 fee |
|---|---|---|
| Carry the full balance 18 months | $1,650 | $1,500 |
| Pay it off evenly over 18 months | $870 | $720 |
| Pay it off evenly over 6 months | $320 | $170 |
| Pay it off in 2 months | $137 | −$13 |
A transfer only helps if the debt would have lasted. For a balance you can clear in two months, the fee costs more than the interest.
What happens at month 19
Any balance left when the promotion ends is charged at the card's standard rate, often higher than the old card's. $5,000 over 18 months needs $278 a month to clear; pay the 2% minimum instead and roughly $3,600 is still there when 24% kicks in. The promotion is a window, not a discount.
Three clauses to read
New purchases usually do not get the 0% rate and may accrue interest immediately. A single late payment can void the promotion. And the fee is added to the balance, so on the example you start owing $5,150, not $5,000.
What this calculator leaves out
The effect on your credit score (a new account and a high utilisation ratio, briefly), the standard rate after the promotion, and whether the new card's limit is large enough to take the whole balance.
Related calculators
- Credit card interest calculator — what the old card actually costs
- Credit card payoff calculator — the monthly figure that clears it in time
- Debt avalanche — ordering several cards