What this calculator does
A balance transfer swaps a high interest rate for a promotional one, usually zero, in exchange for an upfront fee. Whether it is worth doing depends on three things: the fee, how long the promotional rate lasts, and what rate applies after it ends.
On a $3,500 balance at 20 per cent paid off over two years, a 3 per cent fee costs $105 and saves $665 overall. Even a 5 per cent fee still saves $595, because a year at zero per cent avoids a great deal of interest.
The formula
The cost of staying put is the balance plus simple interest at the current rate over the payoff period. The transfer cost is the balance plus the fee plus interest at the promotional rate for its duration and the post-promotional rate thereafter.
| Term | Meaning |
|---|---|
| Transfer fee | A percentage of the balance, charged upfront. Typically 3 to 5 per cent. |
| Promotional period | How long the introductory rate lasts, commonly 12 to 21 months. |
| Post-promotional rate | The rate that applies once the introductory period ends, which is often high. |
The inputs explained
| Field | What to enter |
|---|---|
| Balance to transfer ($) | The balance you would transfer. |
| Current card APR (%) | The APR on your current card. |
| Time you would take to pay it off (years) | How long you realistically expect to take to clear the balance. |
| Balance transfer fee (% of balance) | The transfer fee as a percentage of the balance. |
| Promotional APR (%) | The promotional APR, often zero. |
| Promotional period (months) | How many months the promotional rate lasts. |
| APR after the promo period (%) | The APR once the promotional period ends. |
When to use it
Deciding whether an offer is worthwhile
The fee is certain and immediate; the saving depends on how fast the balance is actually cleared.
Comparing two transfer offers
A longer promotional period often justifies a higher fee, and this shows by how much.
Planning a payoff timeline
Clearing the balance within the promotional period is where nearly all the benefit lies.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How much does the transfer fee matter?
The same transfer at three fee levels.
Questions
When is a balance transfer not worth it?
When the balance is small enough that the fee approaches the interest saved, when the payoff will run well past the promotional period, or when the current rate is already low. It is also not worth it if the freed-up limit simply gets used again.
What happens if I do not clear it in time?
The remaining balance moves to the post-promotional rate, which is often as high as the rate you left. The saving then depends entirely on how much was cleared during the promotional window.
Do new purchases get the promotional rate?
Usually not, and this catches people out. Purchases often attract the standard rate immediately, and payment allocation rules may mean the transferred balance is paid off first, leaving purchases accruing interest.
Does a transfer hurt my credit score?
The application involves a credit check, which has a small short-term effect. A new account also lowers your average account age. Against that, the extra limit reduces utilisation, which usually helps.
For how the balance affects your score, see the credit utilisation calculator. For comparing payoff orders across several debts, see the debt payoff strategy calculator.