Financial Ministry

Transferring credit card balances

Some of you might be considering transferring credit card balances to a zero percent card or one with a lower APR. Before you transfer the balance, you need to consider the following:

  1. The transfer fee. This is usually between 3% to 6%.
  2. For how long is the zero percent good. Typically, it’s 15 to 18 months.
  3. Consider, the total balance you’ll be transferring. If  it’s $3,000 with a 3% fee, then you’ll be paying $90.00 to transfer the balance. Now, you owe $3,090. If it’s 6%, then it would be $180.00
  4. How much are you paying each month. If you are only paying the minimum, then I would definitely not transfer. You won’t have it paid off by the time the zero percent expires.
  5. If you are paying more than the minimum, then use an amortization schedule to see how much you will have paid off during the 15 to 18 months. This will show you if you will have it paid off during the zero percent time period. If you will not have it paid off, then look at the remaining balance at the end of the 15 or 18 months. Let’s say, it’s $2,000. If the total interest you saved is more than the transfer fees, then transfer it. If not, then don’t transfer. Also, remember that you’ll have tacked on the transfer fees, on which you’ll now be paying interest. Your savings should be more than the total transfer fees. This site has a great amortization schedule that’s free for download: .Loan Amortization Schedule for Excel.


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