You may have heard that balance transfer credit cards are a great way to pay less on your debt. But exactly how much will it help?
To get a better idea of how balance transfer cards can help, check out our handy debt repayment calculator to see if a balance transfer card works for you. Then take a look at the following examples of debt repayment to see how it compares to other options.
To use this calculator:
- Fill out your current credit card information by inputting their balances and APR on each line.
- If you know the details about the card you’re transferring to, fill those out to see how much you’ll save. We’ll input some default values for you if you don’t have a specific card in mind.
- Hit “calculate” to see your savings.
Your current credit cards:
Card that you are transferring to:
Intro Term (months)
Balance Transfer Fee
Your monthly repayment
At this rate, you will not pay off your debt.
At this rate you will pay off your debt during the card's intro period
At that rate you will not pay off your debt. You will need to make higher repayments.
Months that it will take you to pay off your debt:
With a balance transfer
Without a balance transfer
Money saved transferring debt to a balance transfer card:
Savings = $1,000
What are my other options for paying down debt?
If you have debt you need to repay, you have options. One of those options is to pay of your debt at the same rate you are now. Let’s compare two options to a balance transfer credit card – continuing on the same path, or getting a personal loan.
Option #1: Pay off your debt at the same rate
Among a sea of choices, making no changes is certainly an option! Let’s say your situation is as follows:
- You have a $5,000 balance on your credit card.
- The balance comes with an APR of 18%.
- You’re paying $250 a month toward your balance.
Here are the results of that strategy:
- You’ll pay off your debt in 24 months.
- You’ll pay $5,989 total ($5,000 in debt, $989 in interest).
There may be a better option that could save you from paying quite so much in interest.
Option #2: Get a personal loan
Instead of paying off your credit card debt the old-fashioned way, you could take out a personal loan. A personal loan gives you a set amount of cash up front that you can use to pay off your credit card, and then you would pay off the loan over time. If you get an interest rate on the loan that’s lower than the rate you’re paying on your credit card, you can pay off your debt slightly faster and more cheaply.
Here’s an example:
- You take out a $5,000 loan, then pay off your credit card with that loan.
- Your loan comes with a 14% APR.
- You continue to pay $250 a month toward your debt.
Here are the results:
- You’ll pay off your debt in 23 months.
- You’ll pay $5,727 total ($5,000 in debt, $727 in interest).
- Compared to paying off your credit card debt at the original rate, you save $262.
Prosper Personal Loans
You could borrow up to $35,000 for a variety of purposes, with rates starting from 5.99%.
- Recommended Credit Score: 640 or higher
- Minimum Loan Amount: $2,000
- Maximum Loan Amount: $35,000
- Loan Term: 3 or 5 years
- Turnaround Time: 1-3 business days
- Simple online application process
- No prepayment penalties
Option #3: Get a balance transfer credit card
With the best balance transfer cards, you’ll get a 0% APR on transferred balances for a long period of time.
Let’s say you’re approved for the Citi Simplicity card, which offers a 0% introductory APR on balance transfers for 21 months.
- You transfer your $5,000 balance to the Citi Simplicity card. You pay a 3% transaction fee, which comes out to $150.
- You get 0% APR on your balance for 21 months.
- You pay $250 a month toward your balance.
Here are the results:
- You’ll pay off your debt in 20 months.
- You’ll pay $5,150 total ($5,000 in debt, $150 for the balance transfer fee).
- Compared to paying off your credit card debt at the original rate, you save $839.
As with any debt repayment plan, it’s best to compare all of your options before making a decision that works best for you.