How it works
The Balance Transfer Savings Calculator helps you evaluate the financial impact of transferring your credit card balance to a new card with a lower introductory APR. The calculator considers your current balance, the existing APR, the new card's introductory APR, the length of the introductory period, and any transfer fees. For instance, if you have a balance of $10,000 at a current APR of 22%, and you transfer it to a card with an introductory APR of 0% for 18 months with a 3% transfer fee, the calculator will first calculate the balance transfer fee, which is $300 (3% of $10,000). It will then compute the interest you would pay at the current APR over the same period, which amounts to approximately $2,820. During the introductory period, you will incur no interest, resulting in significant savings. The net savings will be calculated as the difference between the interest at the current APR and the interest at the intro rate, showing you how much you save by making the transfer.
Tips
- Always compare the total costs of the balance transfer, including fees and interest rates.
- Make payments larger than the minimum to reduce your balance faster during the intro period.
- Set reminders for when the introductory period ends to avoid higher rates kicking in.
- Consider your credit score, as applying for new credit can impact it.
Frequently asked questions
- What is the balance transfer fee?
- The balance transfer fee is typically around 3% of the amount transferred. For a $10,000 balance, this would be $300.
- How much interest will I save with a balance transfer?
- Using the calculator, if you transfer a $10,000 balance from a 22% APR to a 0% APR for 18 months, you could save approximately $2,820 in interest.
- What happens after the introductory period ends?
- Once the introductory period ends, the remaining balance will start accruing interest at the standard APR, which can vary by card.
- Can I transfer balances from multiple cards?
- Yes, you can transfer balances from multiple cards to a new card, as long as the total does not exceed the new card's credit limit.