Balance transfer cards let you move high-interest card debt to a new card with a 0% intro APR for a set period. Done well, more of every payment goes to principal. Done poorly, the balance remains when the regular APR kicks in.
Do the math with the fee included
Most transfers carry a one-time fee, commonly 3% to 5% of the amount moved. Here is an example with a $6,000 balance:
| Item | Amount |
|---|---|
| Balance moved | $6,000 |
| Transfer fee at 3% | $180 |
| Monthly payment to clear $6,180 in 18 months | $343.33 |
If your current card charges around 24% APR, paying the same $343 a month there would cost roughly $1,400 in interest over 18 months, and you would still owe about $1,200. The $180 fee is small by comparison, as long as you clear the balance within the window.
Three rules that make it work
- Divide the balance by the months in the intro period and pay at least that amount.
- Don't add new purchases to the transfer card unless purchases also get 0%.
- Transfer early. Many cards only give the intro rate on transfers made within the first few months.
When it doesn't help
If you can't pay the balance off within the intro period, or the new credit line is too small to hold the debt, a fixed-rate consolidation loan may be a better fit.
See cards with intro APR offers.
Compare credit cardsThis guide is general information, not financial, legal, tax or insurance advice. Terms vary by provider and state.