NerdWallet Credit Card Balance Transfer

Balance Transfer Payoff Time:

\[ T = \frac{P + F}{D} \text{ (during 0% period)} \] \[ T = \frac{\log\left(\frac{P + F}{(P + F) - D \times R}\right)}{\log(1 + R)} \text{ (post-promotional)} \]

Transferred Balance (P):

Transfer Fee % (F):

Monthly Payment (D):

Post-Promotional APR:

0% Promotional Period:

months

Estimated Payoff Time:

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1. What is the Balance Transfer Payoff Calculation?

The NerdWallet balance transfer payoff calculation estimates how long it will take to pay off a credit card balance transfer, considering both the 0% promotional period and the post-promotional APR period.

2. How Does the Calculator Work?

The calculator uses two formulas:

\[ T = \frac{P + F}{D} \text{ (during 0% period)} \] \[ T = \frac{\log\left(\frac{P + F}{(P + F) - D \times R}\right)}{\log(1 + R)} \text{ (post-promotional)} \]

Where:

$ P $ — Transferred balance ($)
$ F $ — Transfer fee (e.g., 3% of P)
$ D $ — Monthly payment ($)
$ R $ — Monthly interest rate (APR / 12, as a decimal)
$ T $ — Time (months)

Explanation: The calculation first determines how much can be paid during the 0% period, then calculates the remaining time needed to pay off any remaining balance after the promotional period ends.

3. Importance of Payoff Time Calculation

Details: Understanding your payoff timeline helps determine if a balance transfer makes financial sense and ensures you can pay off the debt before high interest rates kick in.

4. Using the Calculator

Tips: Enter your transferred balance, transfer fee percentage, planned monthly payment, post-promotional APR, and the length of the 0% promotional period.

5. Frequently Asked Questions (FAQ)

Q1: Should I include the transfer fee in my calculations?
A: Yes, the transfer fee is part of your total debt and should be included in payoff calculations.

Q2: What if I can pay off the balance during the 0% period?
A: If your monthly payments will completely pay off the balance (including fee) during the promotional period, you'll pay no interest.

Q3: How does the APR affect my payoff time?
A: Higher APRs significantly increase the time needed to pay off any remaining balance after the promotional period ends.

Q4: What's a good monthly payment amount?
A: Ideally, choose a payment that will pay off the entire balance during the 0% period. If not possible, pay as much as you can afford.

Q5: Are there other factors to consider?
A: Yes, consider any annual fees on the new card and whether you'll be able to avoid new purchases that might accrue interest immediately.