Is a 0% balance transfer worth it?
Moving $5,000 adds a $150 fee. All in, that's $1,218 less than staying put, at $250 a month. But $1,400 is still owed when the promotion ends and the regular rate starts. $344 a month clears it in time.
Example: $5,000 at 24% APR now; 3% fee, 15 months at 0%, then 24% APR.
Use your own numbersWhat should I check before moving debt to a 0% card?
A 0% balance transfer (definition, opens in a new tab) pauses interest (definition, opens in a new tab) for a set number of months, and the transfer fee is the price of that pause. The ad leads with the 0%. Three things in the terms decide what the move really costs: the fee, the rate once the promotion ends, and whether the offer is a true 0% or deferred interest (definition, opens in a new tab).
What's the transfer fee?
It's usually a percent of the amount moved, or a flat dollar amount, whichever is more. It's added to the new card's balance right away, so it's owed even at 0%.
When does the promotion end, and what's the rate after?
The end date doesn't move. Whatever is still owed then is charged the card's regular APR (definition, opens in a new tab) (annual percentage rate), the yearly rate it quotes. A payment more than 60 days late can raise the rate early.
Is it a true 0%, or deferred interest?
A true 0% charges nothing for the promotion months. Deferred interest keeps a running total in the background and charges all of it if any balance is left at the end. The terms say which.
What does a 0% balance transfer really cost?
Enter what's owed now and its APR, then the offer: the transfer fee, how long the promotion lasts and the regular APR after it. With the same payment on either card, you'll see whether the balance is gone before the promotion ends, what's left if it isn't, and the total cost next to staying put.
Stay put
—
to pay off
- Interest
- $0
- Fee
- $0
- Total cost
- $0
Transfer
—
to pay off
- Interest
- $0
- Fee
- $0
- Total cost
- $0
- Left when the promotion ends
- $0
- Monthly payment to clear it in time
- $0
- Transfer vs. staying put
- $0
See the table
| After | Owed, stay put | Owed, transfer |
|---|
Show the math
- Both cards charge APR ÷ 365 each day, compounded. Over a month that's a rate of (1 + APR ÷ 365)365/12 − 1, applied to what's owed.
- Transfer fee: the percent times the amount moved, or the flat minimum, whichever is more. It's added to the new card's balance on day one.
- The promotional rate (definition, opens in a new tab) applies for the promotion months, then the regular rate applies to whatever is left.
- Deferred interest (an estimate): each promotion month, interest at the regular rate on that month's balance is added to a running total. If anything is owed when the promotion ends, the total is charged then. Real offers figure this from their own terms.
- Payment to clear it in time: the moved balance ÷ the promotion months at 0%, or balance × rate ÷ (1 − (1 + rate)−months) at a promotional rate above 0%.
- Each month's payment is at least the card's minimum, usingCapital One's formula (opens the card agreement in a new tab): interest plus 1% of the balance, at least $27. Other cards differ.
- No new purchases, no late payments, and the rates stay the same. Real statements use the actual days in each billing cycle, so they'll differ a little.
What does a balance transfer change after 1 year and 5 years?
During the promotion, every dollar paid goes to the balance instead of to interest, so the transfer pulls ahead fast. Staying put means interest charged every day on what's owed, which is debt compounding against you. The tables show the interest and fees paid so far, and what's still owed, on each path.
After 1 year
| Path | Interest and fees so far | Still owed |
|---|---|---|
| Stay put | ||
| Transfer |
After 5 years
| Path | Interest and fees so far | Still owed |
|---|---|---|
| Stay put | ||
| Transfer |
Card interest is the third bucket: money that compounds against you.
What can I ask the card company before moving a balance?
A transfer offer pays the card company two ways: the fee up front, and the regular APR on whatever is left when the promotion ends. These questions put the fee, the end date and the rate afterward on the table. One more call, to the current card company, can sometimes lower the rate without moving anything.
Before you call: have the offer's terms and the current statement handy. The terms list the fee, the promotion length and the regular APR.
New card
“What's the transfer fee, and is there a minimum dollar amount?”
The fee is usually a percent of what moves or a flat amount, whichever is more. It goes on the new balance on day one.
New card
“On what date does the promotional rate end, and what is the APR after that?”
The end date sets the target. The moved balance divided by the months left is the payment that clears it in time.
New card
“Is this a true 0%, or is interest deferred if the balance is not paid in full?”
With deferred interest, a small balance left at the end can bring back interest for the whole promotion.
New card
“What rate do new purchases on this card get?”
The CFPB notes that new purchases on the transfer card can lose their grace period, so they charge interest until the whole balance is paid.
Current card
“I've been offered a 0% balance transfer. Can you lower my APR to keep this balance here?”
Card companies sometimes agree. A lower rate where the balance already sits has no transfer fee.
After the transfer: setting autopay to the "clear it in time" amount above, instead of the minimum, keeps the payoff on schedule for the promotion's end date.
If it feels like too much to sort out alone: a nonprofit credit counselor can look at every debt together, often for free. TheNational Foundation for Credit Counseling (opens in a new tab) can connect you with one.
Sources
- Consumer Financial Protection Bureau,What to know about consolidating credit card debt (opens in a new tab): promotional rates end, the transfer fee is a percent or a flat amount (whichever is more), new purchases can lose their grace period, and a payment 60 days late can raise the rate.
- Consumer Financial Protection Bureau,Bulletin on marketing promotional APR offers (2014) (opens in a new tab): covers balance transfers and deferred-interest promotions.
- Minimum payment (definition, opens in a new tab) formula (interest plus 1% of the balance, at least $27):Capital One, Credit Card Agreement for Cabela’s Cards (Oct 1, 2017), in the CFPB credit card agreement database (opens in a new tab). Other cards use different floors.
Educational only, not financial advice. The numbers are illustrations based on what you enter. The offer's terms, your billing cycle and any fees decide the real numbers.