Credit card balance…know the details
A balance transfer is essentially what it sounds like – transferring a current credit card balance to another. But in what circumstances would a consumer do this and how much could it cost?
Let’s take the first question – what circumstance would prompt a consumer to move a credit card balance to another credit card? It doesn’t happen just because they want to. The consumer will apply for a credit card, the lender will check the applicant’s credit and will then either approve or deny the card application. We won’t go into why a credit card issuer could deny the balance transfer in this post. For now, we assume that the card issuer approved the application and the applicant now has a new card. But again, why does the consumer want to transfer a balance? High credit card balances and annual percentage rate (APR). Many credit card issuers advertise a 0% balance transfer for a certain number of months. If the consumer is challenged with paying down an open balance because of the high APR, moving the balance to 0% interest for multiple months can offer relief and an opportunity to pay the balance down. Even paying the minimum payment will reduce the balance because no interest is applied. However, if the consumer continues to make purchases on this card, the 0% interest is less effective, especially if an APR will apply to new purchases.
Now that the consumer has a new card to transfer a balance, how much will it cost? You might say zero because it’s a 0% balance transfer, right? Yes, but not quite. The consumer needs to be aware of two costs – interest rate and fees. The 0% interest rate means that the regular APR will not apply to the balance until after the introductory period expires. There could be a separate APR applied for purchases accrued on the card after the balance was transferred. The lender will also charge a fee on the balance amount transferred. I selected three different cards and pulled the description of their introductory APR terms and balance transfer transaction fee policies.
Discover it® Chrome Application
Balance Transfer (as of May 27, 2025)
Annual Percentage Rate (APR) for Balance Transfers
0% intro APR for 18 months from date of first transfer, for transfers under this offer that post to your account by August 10, 2025. After the intro APR expires, your APR will be 18.24% to 27.24% based on your creditworthiness. This APR will vary with the market based on the Prime Rate.
Annual Percentage Rate (APR) for Purchases
0% intro APR for 6 months from date of account opening. After the intro APR expires, your APR will be 18.24% to 27.24% based on your creditworthiness. This APR will vary with the market based on the Prime Rate.
Transaction fee for Balance Transfer: Intro fee of 3% of the amount of each transfer for transfers that post to your account by August 10, 2025, with the 0% intro APR balance transfer offer described above. After that, 5% of the amount of each transfer.
Capital One Savor Cash
Balance Transfer (as of May 27, 2025)
Annual Percentage Rate (APR) for Purchases and Transfers
0% introductory APR for the first 15 months that your account is open. After that, your APR will be 19.24%, 25.24% or 29.24%, based on your creditworthiness. This APR will vary with the market based on the Prime Rate.
Transaction fee for Balance Transfer: Introductory fee of 3% of the amount of each transferred balance that posts to your account during the first 15 months that your account is open. After that, 4% of the amount of each transferred balance that posts to your account at a promotional APR that we may offer you at any other time.
None for transferred balances at the Purchase APR after the first 15 months that your account has been open.
Navy Federal Credit Union Platinum (must be a Navy Federal Credit Union member)
Balance Transfer (as of May 27, 2025)
Annual Percentage Rate (APR) for Balance Transfers
You can get a 0.99% intro APR for 12 months from account opening on balance transfers made within the first 60 days. After that, a variable APR between 10.99% and 18.00% applies. Expires on Jan. 1, 2026.
Annual Percentage Rate (APR) for Purchases
N/A
Transaction fee for Balance Transfer: No balance transfer fees
What does this mean for a consumer? It means that there is more to the transaction than the mega-font 0% APR. Run a quick calculation to see how much you will pay in fees to transfer the balance, or balances if you are considering more than one card. Carefully read the credit card terms because they aren’t all the same. You want to benefit from the action and can only do so if you are informed about their policies. If you are trying to pay down the debt and need close to 24 months to accomplish that, try not to select a card with a 12 month 0% APR that then kicks over to a 20+% APR. Even though your balance is smaller, the interest on the remaining balance can still be costly. If this is your preferred route, give yourself the best opportunity to succeed.
I took this information and expanded it into a case study for a podcast. I look forward to introducing you to Shannon to learn what decisions she may face by transferring her balance to a new credit card. See you there!
50/70/100 principle. Set one, read the card details and inform yourself on APR, expiration date, and any associated fees. That 100% could save you thousands!! StudioM Financial is here to help. Reach out at letstalk@studiomfinancial.net or (469) 615-0387. Until we meet, keep working on the change.