Balance transfer cards and the debt snowball
A balance transfer card lets you move high-interest card debt onto a new card that charges 0% (or close to it) for a set number of months. Used well, it stops interest cold while you snowball. Used badly, it adds a fee and leaves a balance behind at a high rate. The box below checks which one it would be for your debts.
Would a balance transfer beat your plan?
Using our example plan (four debts, $200.00 a month extra). Build your own plan and this box will use yours.
Moving $4,400.00 onto this card would save $780.73 in interest and fees, and you'd be debt-free 1 month sooner.
The card is paid off before the 18-month promo ends.
The $132.00 transfer fee is added to the card's balance. You keep paying $635.00 a month in total, as now.
How the offers work
- The promo period is usually 12 to 21 months at 0%. After it ends, whatever is left is charged the card's regular rate, often above 20%.
- The transfer fee is usually 3% to 5% of the amount you move, added to the new balance on day one.
- Approval and the credit limit depend on your credit. The limit may not cover everything you want to move, so run the box with only the debts that would fit.
- New purchases on the card may be charged the regular rate straight away, and a late payment can end the promo early. Many people use the card only for the transfer and set up autopay.
Two examples
In our example plan, the store card and Visa ($4,400.00 together) move onto a new card. With 18 months at 0% and a 3% fee ($132.00), the card is paid off before the promo ends, and the plan saves $780.73 after the fee.
With only 12 months at 0%, a 5% fee and a 27% rate afterwards, $1,320.00 is still on the card when the promo ends. The plan still saves $611.80, but less, and every month after the promo costs real interest again.
Where the card fits in the snowball
The transfer card is one more debt on your list, and it takes its place by balance like any other. Keep paying at least what you paid on the debts you moved, and keep your extra going to your current target. If you can see the promo will end with a balance left, it's worth checking whether paying the card down first saves more. The avalanche method is built for that kind of question.
When a transfer isn't the answer
If your credit won't get you a good offer, or the limit is too small to matter, a consolidation loan may be the better comparison. If your payments can't keep up with the interest at all, talk to a nonprofit credit counselor (accredited by the NFCC or FCAA) before opening new credit.
Run your own numbers
The box above uses your saved plan once you have one. Build your plan in about a minute, then come back and try the card terms you've actually been offered.