Balance Transfer Calculator

Balance transfers can be a convenient way to consolidate debt and save money on interest rates. However, they aren't always free.

If you are interested in moving a balance from one credit card to another, use a credit card balance transfer calculator first to see if it makes sense financially.

What is a balance transfer?

A balance transfer involves moving the balance of one credit card to another credit card. People may use a balance transfer to downsize the number of credit cards they carry or, more commonly, to save money on interest charges.

Several credit cards offer special interest rates for balance transfers. Known as balance transfer credit cards, these may have low or 0% APRs that can last a year or more for the amount transferred. For instance, the CardName offers a 0% APR on balance transfers for 21 months from the date of the first transfer for a new cardholder before regular RegAPR APR applies. Citi is a CardRatings advertiser.

The trade-off for these generous low or no-interest rate offers is a balance transfer fee that must be paid on the amount that is transferred to the card. Again, using the CardName as an example, you'll pay an BalanceTransferFees.

Paying a fee may make sense if you are saving enough in interest charges with the new card's APR. However, you might not know for sure unless you use first a balance transfer calculator.

How to use a balance transfer calculator

A credit card balance transfer calculator is simple to use, and you'll only need a few pieces of information:

• The amount of debt you plan to transfer
• The interest rate charged by your current credit card
• The interest rate charged by the new credit card

With the CardRatings.com balance transfer calculator, you can choose from several terms – from three months to five years– to see how much you will save.

Be sure to select a term that corresponds with the length of time you'll receive the promotional APR. For instance, if your new card will have a 0% APR for 12 months, you'll need to select a term that is one year or shorter for the calculator to provide an accurate savings amount.

Also note that a balance transfer calculator only shows how much you will save on interest for your current balance. It doesn't take into account any additional purchases you may make, and those purchases could have a different APR than the special rate offered for your balance transfer. Calculators also may not include any balance transfer fees.

How much could a balance transfer save you?

Your savings from a balance transfer will depend on your current balance, current interest rate and the balance transfer rate. For instance, assuming you currently have a $10,000 balance and a 19% interest rate, you'd save the following in interest charges under these scenarios:

• 0% APR for 3 months: $444.48 savings
• 0% APR for 6 months: $908.71 savings
• 0% APR for 1 year: $1,900 savings
• 6.99% APR for 2 years: $2,714.14 savings

The most generous balance transfer offers today generally have a 0% APR for a maximum of 21 months. If you have a large balance that will take two years or more to pay off, then it might make sense to look for a card that will charge a low interest rate for a longer period rather than assuming a 0% APR credit card will always be best.

Of course, there are other factors beyond interest charges to consider. The balance transfer fee and any annual fee can offset these savings.

On CardRatings.com, you can get more precise savings estimates on popular balance transfer credit cards when you search for partner cards by category (below). With this option, you can enter your current APR, monthly payment amount and annual fee to determine how much you could expect to save with different cards. The search results will also show how long you could expect it to take to pay off your balance, assuming you make no additional purchases.

Should you apply for a balance transfer credit card?

Balance transfer credit cards can be valuable money-saving tools, but they might not be right for everyone. Here's what to consider before applying:

• Savings: Use a balance transfer calculator to determine how much you'll save in interest with your new card. Then, compare that amount to the balance transfer fee you'd pay to determine whether a transfer is worthwhile.
• Credit: The best balance transfer credit cards may be reserved for those with very good or excellent credit. What's more, every application for a credit card results in a hard inquiry on your credit report that can temporarily drop your credit score by a few points. If you plan to make a major purchase - such as a car or home - in the near future, it may be better to delay opening any new accounts.
• Commitment: Once you transfer a balance, are you committed to removing your old card from your wallet? If you make a transfer and then just run up the balance on your current card, you could find yourself buried under a mountain of debt. Plus, if you are late on payments to your new card, you could lose the special balance transfer rate and be charged a significantly higher penalty APR instead.

If you do decide a balance transfer credit card is right for you, compare your available options for the following:

• Interest rate charged on balance transfers
• Length of introductory period before a higher rate is charged
• Balance transfer fee
• Annual fee, if applicable
• Card rewards and perks

To get started, check out the best balance transfer credit cards currently available and then use a balance transfer calculator to confirm the savings each card offers.