0% Balance Transfer Cards: Longer Intro Periods or No Fees? Here’s the Data to Help You Decide
When shopping for a balance transfer credit card, not accounting for the balance transfer fee could cost you hundreds of dollars — well beyond the cost of the fee itself.
That’s the biggest takeaway from a new LendingTree analysis aimed at answering one of the most common and important questions about perhaps the best weapon in consumers’ arsenal against credit card debt: Should I prioritize a longer 0% introductory period or avoiding fees when choosing a balance transfer card?
To answer the question, LendingTree researchers calculated more than 40 scenarios involving various debt totals, introductory period lengths, payment amounts and fee percentages. What we found wasn’t definitive. There’s no one-size-fits-all answer for whether longer 0% periods or lower fees matter more. Sorry, but it’s true.
However, we did find important patterns and takeaways for cardholders. Perhaps the biggest: Simply picking a balance transfer card because it has the longest introductory period doesn’t always work. You also have to take the card’s balance transfer fee into account.
Your mileage may vary due to numerous factors, including how much you pay each month and your APR after the 0% period ends. (Spoiler alert: That rate is a big deal, especially if you only pay the minimum monthly.) However, while the verdict wasn’t crystal clear to answer the central question, it’s obvious that failing to consider a balance transfer credit card’s fees can cause you to spend far more than necessary to pay off that balance — and that’s the last thing you need.
Key findings
- A typical balance transfer card could save someone with $5,000 in card debt more than $700. If you move $5,000 from a credit card with a 24.00% APR to a balance transfer card with a 3% fee and no interest for 12 months — the most commonly found offers in the credit card marketplace today — and make minimum payments, you’ll save $723. (That’s assuming the post-introductory APR on the balance transfer card is also 24.00%.) If you have $10,000 in debt, the savings are nearly double, at $1,443.
- Comparing balance transfer fees could save you far more than just the cost of the fee itself. Balance transfer fees matter — a lot. Say you have the same $5,000 balance and 24.00% post-intro APR as above. Transferring the balance to a card with a 15-month 0% offer and a 5% balance transfer fee will cost you $8,167 in interest and fees. Lower that fee to 3% and you’ll pay $7,896 — a savings of $271.
- The best way to save: Pay more than the minimum. Of course, that’s easier said than done, but it could save thousands of dollars. Using the previous example, if you transfer a $5,000 balance to a card with no interest for 15 months, a 24.00% post-intro APR and a 5% balance transfer fee, you’ll pay $8,167 between interest and fees if you only pay the minimum. If you increase the monthly payment to $250 and keep everything else the same, you’ll pay only $362 between interest and fees — a huge savings of $7,805.
- Ignoring the post-introductory APR could cost you thousands of dollars. When shopping for a balance transfer credit card, people don’t always pay as much attention to the APR they’ll be subject to after the 0% period ends — but it is a big deal. For example, if you only pay the minimum, transferring a $5,000 balance on a card with a 24.00% APR to a 12-month 0% interest card with no fee and a 24% post-introductory APR will save you $1,137 in interest. Keep everything else equal but change the post-intro APR to 18.00% — the maximum rate possible with federal credit union credit cards — and you’d save $3,201. That’s a difference of $2,064, far more than most balance transfer fees you would pay. (A typical fee on a $5,000 transfer would range from $150 to $250.)
A typical balance transfer credit card could mean major savings
A balance transfer credit card is one of the best ways to fight credit card debt. It may sound counterintuitive to attack credit card debt by getting a new credit card, but it can be effective if done wisely.
That no-interest period can range from six to 21 months, though 12 and 15 months are the most common lengths. In addition, there’s usually a one-time fee you have to pay every time you transfer a balance. It’s typically 3% of the amount transferred, though it can range up to 5%.
Even with a typical fee, the savings with a 0% balance transfer credit card can be significant. For example, consider someone who has a $5,000 balance on a credit card with a 24.00% APR — roughly the average for a new credit card offer when these calculations were done. If that cardholder makes only the minimum payment on that card, they would expect to pay $8,887 in interest — well more than one-and-a-half times the original balance — to pay off that balance.
Now, see what happens when you move that balance to a 0% interest balance transfer credit card with a 3% balance transfer fee and a 24.00% post-introductory APR:
- 0% interest for 6 months: $8,732 in interest and fees — a savings of $155
- 0% interest for 12 months (the most typical scenario): $8,164 in interest and fees — a savings of $723
- 0% interest for 18 months: $7,630 in interest and fees — a savings of $1,257
- 0% interest for 21 months: $7,375 in interest and fees — a savings of $1,512
Here’s a more detailed look at these numbers:
Table 1: Paying off $5,000 balance with different lengths of 0% introductory period
Assumptions: 3% balance transfer fee, minimum monthly payments, 24.00% post-intro APR
| 24.00% APR | 0% interest for 6 months | 0% interest for 12 months | 0% interest for 18 months | 0% interest for 21 months | |
|---|---|---|---|---|---|
| Total amount paid | $13,887 | $13,732 | $13,164 | $12,630 | $12,375 |
| Interest and fees (if applicable) paid | $8,887 | $8,732 | $8,164 | $7,630 | $7,375 |
| Difference ($) | $0 | -$155 | -$723 | -$1,257 | -$1,512 |
| Time to pay off | 234 | 237 | 237 | 237 | 237 |
| Balance transfer fee | $0 | $150 | $150 | $150 | $150 |
Source: LendingTree analysis. Note: These calculations assume the minimum payment for these cards is 1% of the balance, plus any interest and fees (a floor of $25).
While those savings are significant, the savings grow even larger if you increase the balance. For example, increase the balance above to $10,000 and the savings double. Here’s what we mean:
Table 2: Paying off $10,000 balance with different lengths of 0% introductory period
Assumptions: 3% balance transfer fee, minimum monthly payments, 24.00% post-intro APR
| 24.00% APR | 0% interest for 6 months | 0% interest for 12 months | 0% interest for 18 months | 0% interest for 21 months | |
|---|---|---|---|---|---|
| Total amount paid | $28,887 | $28,579 | $27,444 | $26,376 | $25,865 |
| Interest and fees (if applicable) paid | $18,887 | $18,579 | $17,444 | $16,376 | $15,865 |
| Difference ($) | $0 | -$308 | -$1,443 | -$2,511 | -$3,022 |
| Time to pay off | 303 | 306 | 306 | 306 | 306 |
| Balance transfer fee | $0 | $300 | $300 | $300 | $300 |
Source: LendingTree analysis. Note: These calculations assume the minimum payment for these cards is 1% of the balance, plus any interest and fees (a floor of $25).
Failing to consider balance transfer fees could cost you far more than just the fee itself
All of the examples above compare cards with the same balance transfer fee. However, as we said, those fees can vary — typically between 3% and 5% of the transferred balance, though sometimes as low as 0%. When comparing multiple cards, failing to account for the balance transfer fees can give you a distorted image of their value.
Here’s an example …
- Say you have the same $5,000 balance as above, and you’re trying to decide between two cards — Card A and Card B — both of which offer 15 months with no interest and the same post-introductory APR.
- Card A has a balance transfer fee of 3%, while Card B has a fee of 5%. Everything else pertinent about the cards is the same.
- Not overly concerned with the fee — how much difference can 2 percentage points make, right? — you opt for Card B. You have your checking account with that bank and are happy to give them a bit more of your business.
- The problem is that those 2 percentage points do make a difference. If you make only the minimum payment, you’ll pay an extra $271 and take two months longer to pay off that balance. That’s real money.
Here’s a closer look …
Table 3: Paying off $5,000 balance with cards with same intro duration but different balance transfer fees
Assumptions: Minimum monthly payments, 24.00% post-intro APR
| 0% interest for 15 months with 3% balance transfer fee | 0% interest for 15 months with 5% balance transfer fee | |
|---|---|---|
| Total amount paid | $12,896 | $13,167 |
| Interest and fees paid | $7,896 | $8,167 |
| Difference ($) | -- | $271 |
| Time to pay off | 237 | 239 |
| Balance transfer fee | $150 | $250 |
Source: LendingTree analysis. Note: These calculations assume the minimum payment for these cards is 1% of the balance, plus any interest and fees (a floor of $25).
Fees even matter when comparing cards with different 0% introductory periods. They can turn what looks like an amazing deal into one that’s meh. Here’s an example using the same $5,000 balance as above:
- You’re considering one card with a 15-month 0% offer (Card A) and two others, Cards B and C, with 18-month offers.
- Card A has a 3% balance transfer fee. Pay the minimum and you’ll owe $7,896 in interest and fees to pay off that balance.
- Card B also has a 3% balance transfer fee, but the longer 0% intro period means more savings. You’ll spend $7,630 to pay off the balance — saving $266 compared to Card A.
- Card C, though it has a longer 0% period than Card A, has a 5% balance transfer fee — the highest of the three. With that card, you’ll pay $7,899 in interest and fees. That means it costs you a few dollars more than Card A despite its intro period being three months longer. Plus, it’ll take you two months longer to pay off than either of the other cards.
Again, here’s a deeper dive into the numbers …
Table 4: Paying off $5,000 balance with cards with different intro durations and different balance transfer fees
Assumptions: Minimum monthly payments, 24.00% post-intro APR
| Card A: 0% interest for 15 months with 3% balance transfer fee | Card B: 0% interest for 18 months with 3% balance transfer fee | Card C: 0% interest for 18 months with 5% balance transfer fee |
|
|---|---|---|---|
| Total amount paid | $12,896 | $12,630 | $12,899 |
| Time to pay off | $7,896 | $7,630 | $7,899 |
| Difference ($) | -- | -$266 | $3 |
| Balance transfer fee | 237 | 237 | 239 |
| Interest and fees paid | $150 | $150 | $250 |
Source: LendingTree analysis. Note: These calculations assume the minimum payment for these cards is 1% of the balance, plus any interest and fees (a floor of $25).
The right choice here is Card B, but it may come as a surprise that Card A looks like the second-best option.
Why is the fee so significant? Because it’s added to your balance when you do the transfer. For example, your $5,000 balance immediately becomes a $5,150 balance if the new card charges a 3% fee. Then, when you pay only the minimum, it takes a long time — and a significant amount of interest — to pay down that extra $150. And when you’re trying to get rid of your credit card debt, every cent matters.
The best way to save? Paying more than the minimum
Job No. 1 for anyone with a credit card is to pay off their balance as soon as possible. Ideally, you’d pay in full at the end of every month, but that’s not realistic for millions of Americans. Life is expensive in 2023, so there’ll inevitably be months for many of us in which that bill isn’t going to get paid in full. That’s true whether you’re dealing with a balance transfer card or not.
If you have transferred a balance, however, and you want to maximize your potential savings, paying more than the minimum is key. Using the same $5,000 balance and 24.00% APR example as before, here’s why …
- If you transfer a $5,000 balance to a card with a 15-month 0% interest card, a 24.00% post-introductory APR and a 5% balance transfer fee, you’ll pay $8,167 between interest and fees if you only pay the minimum.
- Bump the monthly payment to $250 and keep everything else the same, you’ll pay just $362 in interest and fees.
- That’s a huge savings of $7,805 — more than one-and-a-half times the original balance.
- The shortening of the payoff time is just as dramatic. It’ll take just 22 months to pay off instead of 239. That’s just under two years versus just under 20. Kind of a big deal.
That’s just one example. Check out these others …
Table 5: The impact of paying more than the minimum, Part 1
Assumptions: $5,000 balance, minimum monthly payments, 24.00% post-intro APR
| 0% interest for 12 months with no balance transfer fee | 0% interest for 15 months with 3% balance transfer fee | 0% interest for 15 months with 5% balance transfer fee | 0% interest for 18 months with 3% balance transfer fee | 0% interest for 18 months with 5% balance transfer fee | |
|---|---|---|---|---|---|
| Total amount paid | $12,750 | $12,896 | $13,167 | $12,630 | $12,899 |
| Interest and fees (if applicable) paid | $7,750 | $7,896 | $8,167 | $7,630 | $7,899 |
| Time to pay off | 234 | 237 | 239 | 237 | 239 |
| Balance transfer fee | $0 | $150 | $250 | $150 | $250 |
Source: LendingTree analysis. Note: These calculations assume the minimum payment for these cards is 1% of the balance, plus any interest and fees (a floor of $25).
Table 6: The impact of paying more than the minimum, Part 2
Assumptions: $5,000 balance, $250 monthly payment, 24.00% post-intro APR
| 0% interest for 12 months and no balance transfer fee | 0% interest for 15 months with 3% balance transfer fee | 0% interest for 15 months with 5% balance transfer fee | 0% interest for 18 months with 3% balance transfer fee | 0% interest for 18 months with 5% balance transfer fee | |
|---|---|---|---|---|---|
| Total amount paid | $5,198 | $5,245 | $5,362 | $5,171 | $5,281 |
| Interest and fees (if applicable) paid | $198 | $245 | $362 | $171 | $281 |
| Time to pay off | 21 | 21 | 22 | 21 | 22 |
| Balance transfer fee | $0 | $150 | $250 | $150 | $250 |
Source: LendingTree analysis. Note: These calculations assume a $250 monthly payment.
Of course, ramping up from paying the minimum to paying $250 every month is far easier said than done, especially with stubborn inflation, rising interest rates and other economic headwinds.
Still, there’s no question that the impact on your credit card debt can be seismic. It can generate savings that could make that no-fee offer look downright insignificant — especially when those payments go to a card with a long 0% introductory period and the lowest available post-introductory APR. That’s when the real magic can happen.
Don’t ignore the post-introductory APR
Of course, everyone who transfers a balance would like to think they’ll be able to pay it off entirely during the 0% period, but it isn’t breaking news to state that doesn’t always happen. That’s where what we call the post-introductory APR kicks in — the rate you pay on the amount left once the zero-interest period ends — and it’s a big deal. (By the way, with the vast majority of balance transfer cards, you’ll only ever pay interest on the amount remaining after the introductory period. Many people wrongly believe that they might be charged interest retroactively on the whole balance if not paid in full, but that’s usually not the case.)
The truth is that the post-introductory APR can be far more impactful than the balance transfer fee in many cases, especially if you only pay the minimum. Consider this:
- Say you have a $5,000 balance on a card with a 24.00% APR.
- Transferring that balance to a 12-month 0% interest card with no fee and a 24.00% post-introductory APR will save you $1,137 in interest.
- If you change the post-intro APR to 18.00% and leave everything else the same, you’d save $3,201.
- That’s a difference of $2,064, more than 40% of the original balance. You’ll also trim a year off your payoff time.
Here’s a closer look:
Table 7: Paying off $5,000 balance with cards with same length of 0% offer and no balance transfer fee but different post-intro APRs
Assumptions: Minimum monthly payments, 24.00% post-intro APR
| 24.00% APR | 0% interest for 12 months with 18.00% APR after | 0% interest for 12 months with 24.00% APR after | |
|---|---|---|---|
| Total amount paid | $13,887 | $10,686 | $12,750 |
| Interest paid | $8,887 | $5,686 | $7,750 |
| Difference ($) | $0 | -$3,201 | -$1,137 |
| Time to pay off | 234 | 222 | 234 |
| Balance transfer fee | $0 | $0 | $0 |
Source: LendingTree analysis. Note: These calculations assume the minimum payment for these cards is 1% of the balance, plus any interest and fees (a floor of $25).
But, wait, can the APRs vary that much? They sure can. You may have to go to a federal credit union to find an 18.00% APR — the maximum rate possible with federal credit union cards — but they’re out there. But even if you can’t find APRs quite that low, the 6-percentage-point difference used in the example is the same as the difference between 21.00% and 27.00%, for example. There are no guarantees, of course, but if you can lower your post-intro APR by even a couple of percentage points by shopping around, it can make a difference.
How to make a difference
One of the biggest takeaways from this report is that there are plenty of ways you can make a difference when choosing a balance transfer card. Can you find a card with a 15-month 0% offer rather than a 12-month offer? Instead of a card with a 5% balance transfer fee, can you get one at 3% — or maybe even 0%? Is there anything you can do to bump up your payments to go beyond just the minimum?
Of course, all this can be easier said than done. That’s why it’s so important to take your time. Reassess your budget. Do your homework. Shop around and get the best deal for you. If you do, you could dramatically reduce the interest and time required to pay off your debt so you can finally be rid of it. When you are, it can be life-changing.
Methodology
LendingTree calculated more than 40 scenarios to compare balance transfer cards and whether it makes more sense for cardholders to choose a longer 0% intro period or no fees.
The study made separate calculations based on cardholders making minimum monthly payments (interest plus 1% of the balance) with a floor of $25 or $250 monthly payments.
We assumed a 3% balance transfer fee — the most common based on a separate LendingTree study — unless we were showing a scenario where there was no fee or a 5% fee.
We calculated transferred balances of $5,000 and $10,000 from a card with a 24.00% APR to balance transfer cards with a 0% intro APR for six, 12, 15, 18 and 21 months (after which a 24.00% APR applies). We also looked at a balance transfer with a 12-month 0% intro period where the rate was 18.00% after that period to show the maximum allowed with federal credit union credit cards.
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