Have you been trying to calculate if a balance transfer is right for you❓ Wonder no more. We have you covered. Our credit card balance transfer calculator will take all of the relevant information and tell you whether you are making a good deal or not. Interested?

Keep reading to learn more about:

  • What a balance transfer is;
  • How to use our balance transfer comparison calculator;
  • How to calculate your balance transfer fee; and
  • How to figure out if it is worth doing a balance transfer.

Are you enjoying this tool? Be sure to check out our personal loan EMI calculator as well.

What is a balance transfer?

A balance transfer refers to a process where a credit card holder moves the balance held on one card to another to obtain a lower interest rate.

The two cards are usually from different credit card companies.

So if you own a credit card from Company A with a balance of $7,000 at an interest of 7% per annum and Company B offers you the opportunity to switch with the bonus of paying 0% for the first twelve months, this may seem like a great deal. However, there is more than the promotional interest rate to be considered, and we will cover those in the balance transfer pros and cons section.

What is a balance transfer fee?

A balance transfer fee is a one-off charge that a lender asks a credit card holder to pay when a lender agrees to transfer his credit card balance from another lender to his.

How to use our balance transfer calculator

Our credit card balance transfer calculator is two calculators in one, but it is very easy to use. First, you need to choose the period within which you plan to pay off the balance you are transferring. Then, refer to the corresponding instruction below.

The promotional period balance transfer calculator

If you choose the promotional period, you will need to enter:

  1. The amount you wish to transfer.
  2. The transfer fee.
  3. The promotional rate.
  4. The time required to pay off the amount you are transferring.
    NB: The time required is also the promotional period in this instance. Additionally, the period is only entered once and used for both the old and new cards.
  5. The rate of your current credit card (old rate).
  6. Our calculator will display the cost of both credit cards, along with further information on how much you will save or lose in the period you plan to pay off your card.

The long-term use balance transfer calculator

If you decide to take a more extended period than the promotional period to pay off your card, you will need to choose long-term use. In this next mode of the calculator, you will need to enter the following:

  1. Amount you wish to transfer.
  2. Transfer fee.
  3. Time required (the time it will take to pay off the balance).
  4. Promotional period.
  5. Promotional rate.
  6. Final rate, i.e., the amount you can expect to pay on your balance once the promotional period has passed.
  7. Old credit card rate (the rate of your present card).

At this point, you will be able to see and compare the cost of the old and new credit cards for the period you plan to pay them off.

Additionally, our calculator will tell you whether you will save or lose money on your transfer within the stipulated time frame.

Are you interested in other financial calculators? Our amortization and loan to value calculators may interest you too.

How do I calculate the balance transfer fee for my credit card?

You may calculate your balance transfer fee by these simple steps:

  1. Get the amount you wish to transfer.
  2. Get the balance transfer percentage/rate listed on your credit card agreement.
  3. Multiply the first value by the second. The answer here is your balance transfer fee.

Things to consider when deciding if a balance transfer is worth it

When considering doing a balance transfer with your credit card, it is imperative to first calculate whether the balance transfer is worth it. For instance, you may apply for a credit card that offers 0% on your balance transfer amount for a period. However, unless you have a viable plan to pay off the balance in that stipulated period, you may find that this balance transfer was more effort than it was worth.

Additionally, here are some other things to consider when we start to calculate if a balance transfer is worth it:

  • The low or 0 percent may only apply to the amount being transferred and not any new amount you will accumulate on that card.

  • What is the balance transfer fee compared to your current interest rate? It is important to know this to ensure that the transfer does not result in higher charges or pretty much the same amount.

  • Will it be worth retaining and using your new credit card after the promotional period, or will the interest rate charged result in higher fees than the original card?

How to calculate if a balance transfer is worth it

For those of us who do not have a background in finance, here is how to calculate if a balance transfer is worth it:

  1. Your present credit card has a balance of $3500 at an interest rate of 20% per annum.

  2. Presently, you pay $150 per month, but you don't seem to be making much of a dent in your payments.

  3. So, you find a new credit card company that offers to transfer your balance for a 10% balance transfer fee with 0% on your transferred balance for 12 months with a new rate of 18% when the promotional period has ended.

  4. Your transfer fee is 5% of your current balance, and you have a plan to pay off the balance in 24 months.

Firstly for your old credit card, your interest payment for the 24 months would have been:

20/100 × 3500 × 2 = $1400

So to pay off the $3500 in 24 months, you needed to pay:

3500 + 1400 = 4900 for the entire period.

For your new card:
Your balance transfer fee would be:

3500 × 10/100 = $350

For the 24 months payback period, you will pay an interest of:

$0 for the first year and 3500 × 18/100 × 1 = $630 for the following year.

So for the 24 months, you will pay a total of:

350 + 630 + 3500 = $4480 for the entire period.

This means that by switching, you will save:

4900 - 4480 = $420.

Of course, you can save yourself all the hard work by simply allowing our balance transfer comparison calculator to do the work for you 😉.

The pros and cons of doing a balance transfer

Here are some pros of doing a balance transfer:

  • A chance to freeze the interest on your payments and allow you to catch up

    Credit cards may seem like a great idea, but if you do not know how to manage them, the payments can quickly add up to astronomical sums. Some credit card companies offer users a 0% APR for a period when they do a balance transfer. This is great since, with some discipline, you can make a significant dent in your credit card debt because no interest is being accumulated.

  • Better interest rates and other rewards

    A balance transfer may allow you to work with a credit card company at a lower rate. This means that future debt due to accumulated interest will grow at a slower pace.

    Aside from lower interest rates, some credit card companies also offer cardholders the chance to earn rewards, which is another benefit.

There are also some cons involved in making a balance transfer:

  • The transfer fee

    The transfer fee may not seem like much, but it could be. In fact, it may balance out any money you hope to save on interest. In such an instance, you would have saved no money at all.

  • The interest rate quoted at the time of a balance transfer is usually temporary.

  • The promotional interest rate may not apply to new charges made on the card.

FAQ

When is a balance transfer worth it?

Balance transfers are worth it if they save you money. If, however, you cannot save money on your balance transfer within the time frame you plan to pay off the balance, it is not worth it.

What is my balance transfer fee for $5000 at a transfer rate of 3%?

$250. To calculate the fee, simply find 5% of 5000. That is:

Transfer fee = 5/100 × 5000 = $250.

Adena Benn
If you are contemplating a balance transfer with a plan to pay off the card within the promotional period, choose promotional period. If, however, you will not complete your payments within the promotional period you should choose long-term use.
Proposed period of use
Promotional period
Old card cost
Old rate
%
Monthly payment
$
New card cost
Amount to transfer
$
Transfer fee
%
Promotional rate
%
Time required
months
Compare credit card costs
Old credit card cost
$
New credit card cost
$
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