Is a Balance Transfer Worth It? How to Run the Numbers
Quick summary: A balance transfer moves high-interest credit card debt to a new card with a low or 0% promotional rate. The appeal is obvious: less interest while the promo lasts. But two costs work against you — the transfer fee (usually 1-3% of the balance, charged upfront) and whatever happens to any leftover balance once the promo period ends. Whether a transfer actually saves you money depends on how much you can pay each month, how long the promo lasts, and how steep the regular rate is once it kicks back in. Running the actual numbers, rather than assuming "0% is always better," is the only way to know for sure.
This article is for general calculation purposes only and doesn't account for credit-score effects, taxes, fees outside the transfer offer, or your full financial picture.
A Real Example
Say you're carrying $10,000 on a card at 22.99% APR, and a new card offers 0% for 18 months with a 3% transfer fee, reverting to 18.99% afterward. If you can put $250 a month toward it either way, here's how the two paths compare:
Staying on the current card, you'd pay it off in 6 years, 6 months, with $9,383.40 in total interest — a total cost of $19,383.40.
Transferring, the $300 fee gets added to the balance immediately, bringing it to $10,300. At 0% for 18 months, your $250 payments knock that down to $5,800 by the time the promo ends. That remaining $5,800 then accrues interest at 18.99% until it's paid off, adding $1,500.44 in interest. Total cost: $11,800.44 — a payoff timeline of exactly 4 years.
Net savings from transferring: $7,582.97.
That's a substantial win, and it illustrates the core mechanic well: the fee is small and fixed, but the promo period buys real time at 0%, and even the post-promo rate here (18.99%) is lower than the original card's rate (22.99%) — so there's no point in the schedule where the new card ever costs more per month than the old one would have.
When It Backfires
Not every scenario works out that cleanly. Suppose the numbers are different: a $15,000 balance at 15% APR, transferred to a card with a short 6-month promo and a steep 27.99% regular rate afterward. In a case like this, the short promo window doesn't have time to offset what happens next — once the promo ends, the new card's rate is nearly double the old one, and the fee plus the elevated post-promo interest can end up costing more overall than simply staying put.
The lesson isn't "never transfer" — it's that the promo length and the size of the rate jump afterward matter just as much as the headline 0% number. A generous promo period paired with a modest rate increase afterward (like the $10,000 example above) tends to work in your favor. A short promo paired with a steep rate hike afterward can erase the benefit entirely, especially on a larger balance.
Watch the Minimum Payment, Too
Most cards require a minimum monthly payment — often 2-3% of the balance — even during a 0% promo period. If your planned payment falls below that minimum, the math you've run isn't the math your card will actually let you follow. It's worth checking your card's minimum payment terms before assuming you can pay exactly what you'd planned.
Run Your Own Numbers
Every balance transfer offer is different, and small changes in the transfer fee, promo length, or post-promo rate can shift the outcome meaningfully. The Balance Transfer Calculator runs the full month-by-month comparison for your specific numbers — including a chart of both balances over time, a full payment schedule you can download, and a warning if the transfer fee and post-promo interest would actually cost more than staying put.
Try it with your own balance and card offer, or start with a fixed monthly payment or a target payoff date — calculate your own scenario here.
Frequently Asked Questions
Does a balance transfer hurt your credit score?
Opening a new card can cause a small, temporary dip due to the credit inquiry and a lower average account age. Over time, paying down debt and lowering your credit utilization may help your score, depending on the rest of your credit profile.
What happens if I don't pay off the balance before the promo ends?
Whatever balance remains starts accruing interest at the card's regular APR — which is often significantly higher than the promo rate. This is exactly the "carries over" note shown in the calculator's results.
Is there a limit to how much I can transfer?
Yes — it's capped by the new card's credit limit, and issuers often only allow transferring up to a certain percentage of that limit, not the full amount.
Is a balance transfer always worth it?
No. It depends on the transfer fee, how much of the balance you can pay off during the promo period, and how steep the regular APR is afterward. Running the numbers for your specific offer is the only reliable way to know.
How is the interest calculated?
The calculator models interest the way Canadian credit cards typically do — compounding daily — applying the promo rate during the promotional period and the regular rate afterward to whatever balance remains.
Related Calculators
(Using a transfer to fund an investment or avoid a higher rate elsewhere, rather than pay off debt? A separate Arbitrage Calculator for that is coming soon.)