How can I calculate the total cost of a balance transfer including fees

To calculate the total cost of a balance transfer including fees, follow these steps:

1. Determine the balance transfer fee:
   Most credit cards charge a balance transfer fee of 3% to 5% of the transferred amount. To calculate this:

• Multiply the balance you’re transferring by the fee percentage
• For example, transferring $5,000 with a 5% fee would cost: $5,000 x 0.05 = $250

2. Add the fee to the transferred balance:

• Total transferred amount = Original balance + Balance transfer fee
• Using the example above: $5,000 + $250 = $5,250

3. Consider the introductory APR period:
   Many balance transfer cards offer a 0% APR for a promotional period. If you can pay off the entire balance during this time, you won’t incur additional interest charges.
4. Calculate potential interest charges:
   If you can’t pay off the full balance during the intro period, calculate the interest you’ll pay on the remaining balance:

• Determine the remaining balance after the intro period
• Multiply that by the card’s regular APR
• Divide by 12 for the monthly interest charge

5. Sum up all costs:
   Total cost = Transferred balance + Balance transfer fee + Interest charges (if any)

To make this calculation easier, you can use online tools like balance transfer calculators. These tools allow you to input your current balance, interest rate, monthly payment, and the terms of the new balance transfer card to compare costs and potential savings.Remember to consider:

• The length of the introductory APR period
• The regular APR after the intro period ends
• Any annual fees on the new card
• Your ability to pay off the balance before the intro period expires

By carefully calculating these factors, you can determine whether a balance transfer will save you money in the long run, despite the upfront fee