Balance Transfer Math: Does a 0% Offer Beat the Fee?
A 0% balance transfer can save a lot of interest, but it is not free: most charge a fee of 3% to 5% of the amount moved, and the 0% period ends.
Example
$6,000 at 24% APR. Paying $400 a month, it takes about 18 months and roughly $1,200 in interest.
Transfer to a 0% card for 18 months with a 3% fee: fee $180. At $400 a month, the $6,180 is cleared in about 16 months, inside the promo period. Saving: roughly $1,000.
When it does not work
- The payment is too small. At $200 a month the balance is still about $2,600 when the 0% ends, and the remaining balance moves to the card’s regular APR.
- New spending on the old card. Moving the balance frees the limit; spending it again doubles the problem.
- Late payments. Some offers can end the promo rate after a missed payment.
The planning number
Required monthly payment = (balance + fee) ÷ promo months. For $6,000 with a 3% fee over 18 months: $6,180 ÷ 18 ≈ $343. If that fits the budget, the offer can work; if not, a lower fixed-rate consolidation loan may be the safer route.
Free tools
- Balance transfer calculator: https://smartbudgetsheets.surge.sh/calculators/balance-transfer-calculator/?utm_source=nostr
- Debt consolidation calculator: https://smartbudgetsheets.surge.sh/calculators/debt-consolidation-calculator/?utm_source=nostr
- Credit card interest calculator: https://smartbudgetsheets.surge.sh/calculators/credit-card-interest-calculator/?utm_source=nostr
- Debt Payoff Planner, up to 8 debts (Payhip): https://payhip.com/b/PtBLU?utm_source=nostr
- 42 free budget templates, pay what you want ($0 is fine): https://smartbudgetsheet.gumroad.com/l/ngpkrb?utm_source=nostr
General information, not financial advice. Figures are rounded examples.
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