What It Means
A balance transfer moves debt from one credit card to another, usually one offering a low or 0% promotional rate for a set number of months. Your new card pays off the old balance, and you repay the new card instead. The card company can charge a fee for the move, even on a 0% offer, and once the promotion ends, whatever is left starts collecting interestInterest rateThe yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost. See more at the card's regular rate.
Try It: Will the Balance Be Gone Before the Promo Ends?
Example numbers to start. This assumes a 0% promotional rate on the transfer and the fee added to the balance.
Paid off before the promotion ends, so no interest on the transfer.
What's left starts collecting interest at the regular APR. At the same payment, that's roughly more in interest before it's gone.
After the promotion, this payment wouldn't cover the monthly interest on what's left.
A rough estimate using the APR divided by 12 each month. Your card's terms decide the real figures.
How People Say It
- "I moved my store card balance to a 0% card."
- "There's still a fee on the transfer, even at 0%."
- "I need this paid off before the intro rate runs out."
The Breakdown
Worked example. A $5,000 card balance moves to a new card with a 0% promotional rate for 15 months and an example fee of 3%:
| Item | Amount |
|---|---|
| Balance moved | $5,000 |
| Transfer fee at 3% | $150 |
| New balanceStatement balanceWhat you owed on a credit card when the billing cycle closed, as printed on that month's statement. See more | $5,150 |
| Paid over 15 months at $250 | $3,750 |
| Left when the promotion ends | $1,400 |
| Payment that clears it in time | About $344 a month |
What the result means. At $250 a month, $1,400 is still owed when the promotion ends, and it starts collecting interest at the card's regular APR. At 24% and the same payment, that takes about 6 more months and roughly $100 in interest. Paying about $344 a month from the start would clear the whole balance while the rate is still 0%. Divide the new balance, fee included, by the number of promo months to find your own target.
Good to Know
The CFPB says a balance transfer fee is typically the larger of two figures, a set percentage of what you move or a flat dollar amount, and that a card company can charge it even on a 0% offer. By law, an introductory rate runs for six months or longer, unless a payment is more than 60 days overdue. After the promotional period, the rate on the card may rise and your payment with it. The CFPB also warns that paying more than 60 days late can let the issuer raise the rate on all your balances, the transferred one included.
FAQ
Is there a fee for a 0% balance transfer?
Often, yes. The CFPB says a card company may charge a balance transfer fee on a zero percent offer, typically the larger of a percentage of the amount moved and a flat fee.
How long does a balance transfer rate last?
The offer states its length, and the CFPB says an introductory rate must run for six months or longer. That protection ends if a payment falls more than 60 days behind.
What happens to a transferred balance when the promotion ends?
Whatever you still owe starts collecting interest at the card's regular rate, so your payment may go up. Check the offer's end date and the rate that follows it before you transfer.
Do It in Buhata
Countdown and Reminders
Add the day the promotion ends to Countdown in Buhata and set a Reminder a month before it to check what's still owed on the card.
Open BuhataRelated Terms and Categories
- 0% APR
A promotional interest rate of zero percent for a set period, during which the promotional balance doesn't grow with interest.
- Debt consolidation
Rolling several debts into one new loan or card balance, usually to get a single payment and, ideally, a lower interest rate.
Sources
Consumer Financial Protection Bureau, "What is a balance transfer fee? Can a balance transfer fee be charged on a zero percent interest rate offer?"; CFPB, "How long can I keep a low rate on a balance transfer or other introductory rate?"; CFPB, "What do I need to know about consolidating my credit card debt?"
- www.consumerfinance.gov/ask-cfpb/what-is-a-balance-transfer-fee-can-a-balance-transfer-fee-be-charged-on-a-zero-percent-interest-rate-offer-en-53
- www.consumerfinance.gov/ask-cfpb/how-long-can-i-keep-a-low-rate-on-a-balance-transfer-or-other-introductory-rate-en-15
- www.consumerfinance.gov/ask-cfpb/what-do-i-need-to-know-if-im-thinking-about-consolidating-my-credit-card-debt-en-1861
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