Money guide · Credit scores and debt payoff
Balance transfer cards: calculate the cost of 0% APR
Evaluate a balance transfer using its fee, promotional deadline, required payoff payment, and the rate on any remaining debt.
How it works
Read the separate terms for transfers and purchases. The promotional rate may require a transfer by a specified date and apply for a limited period. Fees can increase the balance immediately. New purchases may not receive the same rate or grace-period treatment, and the standard rate after the promotion can materially change the cost.
A worked example
Transfer a hypothetical $6,000 balance with a 4% fee and 15 months at 0% APR. The fee is $240 and the resulting balance is $6,240. Paying it off evenly takes $416 monthly if there are no other charges. At $300 monthly, $1,740 remains after 15 payments, before interest that may begin under the post-promotion terms.
What to compare
Compare the fee with the interest you would otherwise pay under the same repayment budget. Check the credit limit, eligible creditors, annual fee, due dates, and what happens to purchases. Continue required payments on the old account until you confirm the transfer completed. Plan an affordable payment that meets your target date rather than relying on the new minimum.
A common mistake to avoid
A promotion can postpone interest without solving the reason debt accumulated. Avoid using the old available limit to add new borrowing. Distinguish a conventional promotional APR from a deferred-interest offer; their mechanics differ. The displayed zero is only one part of the agreement, so keep the fee and expiration visible in your debt plan.
Is 0% APR always free borrowing?
No. Transfer or annual fees can apply, and balances left after the offer may accrue interest at a different rate. Read the full offer.
Sources and further reading
Connect this to inflation
Inflation changes the spending power of money over time. Read the related inflation explainer, or measure changes in buying power using your own assumptions.