How Much Will a Balance Transfer Save You?

Calculating the cost of a balance transfer to determine potential savings

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If you have a big balance on a credit card with a high interest rate, paying it off may seem impossible. Your monthly payments only chip away at the balance because so much of the payment goes toward interest. Transferring the balance to a lower interest rate credit card can help you save money and allow you to pay your balance faster.

Saving Money With a Balance Transfer Isn’t a Given

Before you open up a new credit card and move your balance, it’s important to weigh the cost against the benefits. Most balance transfer credit cards charge a fee to transfer your balance, and some cards have an annual fee. These two costs and the amount of time it takes you to pay off your balance may negate any interest savings you get from transferring your balance because they increase the cost of moving your balance to a new credit card.

In general, the lower your balance transfer rate (0% is ideal) and the longer the promotional period lasts, the better chance you have of paying off your balance at no interest. If you cannot pay off the balance before the promotional period ends, and the post-promotional interest rate is higher than your current interest rate, the balance transfer may not be worth it.

Once you transfer the balance, it’s important not to make any purchases on the credit card until you’ve paid off the balance transfer. Even if purchases also have a promotional rate, increasing your overall balance makes it harder to pay off the transfer.

Don’t get lax with your credit card payments because you have a promotional interest rate. Keep up with the same monthly payments you were making before — more than that if you can — to pay off as much of the balance as you can before the promotional rate expires. Once the promotional period is over, monthly finance charges will kick in and delay your credit card payoff.

Three Balance Transfer Calculators

You can use a balance transfer calculator to compare paying off your balance on your current credit card to paying it off with a balance transfer. To use the calculators, you’ll need to know the current balance and interest rate of all the credit cards you want to transfer, as well as the promotional and post-promotional terms for the balance transfer credit card.

All three calculators mentioned below let you input multiple credit cards that you’d like to transfer and the promotional details of the balance transfer credit card you’re considering. If you’ve received a pre-approved offer in the mail, you can use that credit card. Check out a few balance transfer credit cards from the top credit card issuers to get a feel for the terms you might expect.

  1. Bankrate Credit Card Transfer Calculator
  2. Balance Transfer Calculator
  3. Balance Transfer Calculator

Getting Approved for a Balance Transfer Credit Card

Keep in mind that you typically need to have excellent credit to qualify for the best balance transfer offers. Recent late payments can especially hurt your chances of being approved for a credit card with a 0% introductory rate or for being approved for enough credit to transfer your balance.