1. What Is A 0% Balance Transfer?

A 0% balance transfer allows you to move existing credit card debt to a new card with a 0% introductory APR period. This can help you save money on interest while paying down your debt faster.

2. How Does The Calculator Work?

The calculator uses a simple formula:

Where:

• Interest Avoided — The amount of interest you would have paid on your original card
• Fee — The balance transfer fee (typically 3-5% of the transferred amount)

Explanation: This calculation helps you determine whether a balance transfer will actually save you money after accounting for any transfer fees.

3. Importance Of Calculating Savings

Details: Properly calculating potential savings helps you make informed financial decisions and avoid balance transfers that might actually cost you money due to high fees.

4. Using The Calculator

Tips: Enter the total interest you would avoid by transferring your balance and the fee charged for the transfer. Both values should be in dollars. Positive savings indicate the transfer is beneficial.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical balance transfer fee?
A: Most balance transfers charge a fee of 3-5% of the transferred amount, though some cards offer promotional periods with no fee.

Q2: How do I calculate interest avoided?
A: Multiply your current APR by your balance and the length of the 0% period. For example: $5,000 balance × 18% APR × 12 months = $900 interest avoided.

Q3: Are there any hidden costs with balance transfers?
A: Watch for late payment fees, increased APRs after the promotional period ends, and potential impacts on your credit score from opening new accounts.

Q4: What happens if I don't pay off the balance during the 0% period?
A: Typically, you'll be charged deferred interest on the remaining balance at the standard APR, which could eliminate any savings.

Q5: Should I transfer my mortgage or car loan using this method?
A: Generally not recommended. Balance transfers are designed for credit card debt and may not be cost-effective for larger, lower-interest loans.