Credit Card Balance Transfer Cost Comparison Calculator

Credit card balance transfers can be a smart financial strategy for those carrying debt, especially if they are able to move their balances to a new card with a lower interest rate. This calculator helps you evaluate the potential benefits by comparing the interest costs on your current credit card with the savings from a new card, factoring in promotional APRs, transfer fees, and ongoing interest rates.

Historical Background

Credit card balance transfers have been available for many years, offering consumers a chance to move high-interest debt from one card to another with a lower rate, often with a promotional period. These transfers can be a useful tool for debt management, as long as the transfer fees and the duration of the promotional APR are considered.

Calculation Formula

The formulas used to calculate the total interest costs and savings are as follows:

1. Current Card Interest: \[ \text{Current Interest} = \text{Balance} \times \left(\frac{\text{APR}}{100}\right) \times \frac{\text{Months to Carry}}{12} \]

2. New Card Interest During Promo Period: \[ \text{Promo Period Interest} = \text{Balance} \times \left(\frac{\text{Promo APR}}{100}\right) \times \frac{\text{Promo Period Months}}{12} \]

3. New Card Interest After Promo Period: \[ \text{Post Promo Interest} = \left(\text{Months to Carry} - \text{Promo Period Months}\right) \times \left(\text{Balance} \times \left(\frac{\text{Ongoing APR}}{100}\right) / 12 \right) \]

4. Transfer Fee: \[ \text{Transfer Fee} = \text{Balance} \times \left(\frac{\text{Transfer Fee Percentage}}{100}\right) \]

5. Total New Card Interest: \[ \text{Total New Card Interest} = \text{Promo Period Interest} + \text{Post Promo Interest} + \text{Transfer Fee} \]

6. Total Savings: \[ \text{Total Savings} = \text{Current Interest} - \text{Total New Card Interest} \]

Example Calculation

Suppose you have a $5,000 balance on your current card with a