Tools · Debt
Balance Transfer vs. Consolidation Loan
A 0% APR balance transfer card looks unbeatable until you count the transfer fee and the rate that kicks in when the promo ends. Put it up against a fixed-rate consolidation loan using the same monthly budget and see which one actually costs less.
← Back to ToolsBefore the numbers
What each option is actually trading off
The math below only tells half the story. Both paths carry risks that don't show up in a total-cost number. Worth reading before you trust the verdict.
0% Balance Transfer
Pluses
- Stops the bleeding immediately: the rate on the moved balance drops to 0% on day one.
- Every dollar paid goes straight to principal while the promo lasts, no prepayment penalty.
- Fastest to execute: usually an online application against a card you may already be approved for.
Minuses
- The rate rockets past your original APR (often 25-30%+) on whatever's left once the promo window closes.
- Temptation risk: the old card is now empty and available, and it's easy to run it back up on top of the new one.
- A transfer fee, charged upfront on the full amount moved, whether or not you pay it off in time.
- Revolving balances (even at 0%) weigh on credit utilization and score more than an installment loan does.
- The 0% offer typically requires good-to-excellent credit, and can be voided early by a single missed payment.
- You need a credit limit on the new card big enough to hold the whole transferred balance.
Consolidation Loan
Pluses
- Static, fixed-rate installment debt: FICO weighs it more favorably than the same balance sitting on a revolving card.
- It's a closed loan: you can't add to the balance, only pay it down.
- A longer term can lower the monthly payment if cash flow matters more than total cost.
- No transfer fee, and the rate is locked for the full term: no cliff when a promo period ends.
- Pays the card off directly, which removes the "empty card sitting there" temptation the day it funds.
Minuses
- Never actually 0%: you're guaranteed to pay some interest, even though the rate is usually far below a card's.
- Often carries its own origination fee (1-8%, financed into the loan).
- Stretching the term to shrink the payment can mean paying more total interest over time, even at a lower rate.
- Requires income/DTI underwriting, so it's slower to fund than a balance transfer and not guaranteed to approve.
- If the old card gets reused instead of closed, you now owe on both the loan and a rebuilt card balance, worse than where you started.
💳 Your Debt Today
$
Total balance across whatever card(s) you'd move
Enter an amount greater than $0
%
What you're paying right now if you do nothing
Enter a rate between 0% and 40%
$
Applied to the "do nothing" and balance transfer paths. The consolidation loan gets its own fixed payment, below.
Enter an amount greater than $0
🔄 Option A: 0% Balance Transfer
%
Charged upfront on the amount moved, added to your new balance. 3-5% is the norm; a few cards run 0% intro transfer promos, north of 5% is unusual.
Enter a rate between 0% and 10%
mo
How long the introductory 0% APR lasts
Enter a whole number of months between 1 and 36
%
Rate on whatever balance is still left once the promo ends
Enter a rate between 0% and 40%
🏦 Option B: Consolidation Loan
%
Fixed for the life of the loan
Enter a rate between 0% and 30%
yrs
Fixed monthly payment for this many years
Enter a whole number of years between 1 and 10
%
Many consolidation loans charge 1-8% upfront, financed into the loan. Leave at 0% if yours doesn't.
Enter a rate between 0% and 10%
📋 Side-by-Side Comparison
| Path | Monthly Payment | Upfront Fee | Payoff Time | Total Interest | Total Cost |
|---|
Total Cost = original balance + upfront fee + all interest paid. "Do Nothing" and "Balance Transfer" use the monthly payment you entered above; the loan uses its own fixed payment.
📝 Methodology & Assumptions
This models three ways of handling the same starting balance:
- Do Nothing: Keep paying the current card at its current APR, applying your stated monthly payment every month until it's gone.
- Balance Transfer: The transfer fee is added to the balance on day one (standard practice: it's charged to the new card, not paid separately). That combined balance accrues 0% interest for the promo period, then switches to the post-promo APR on whatever remains. It does not model deferred/retroactive interest (some store-card "0% if paid in full" promos work that way; most balance-transfer cards don't). Here the higher rate only applies going forward, on the remaining balance, as you described.
- Consolidation Loan: Any origination fee is financed into the loan amount. The loan then gets a standard fixed-rate, fully amortizing payment for the fixed term: that payment is calculated for you, not something you set.
- Payment Discipline: Every scenario assumes the stated payment is made every month, on time, with no new spending added to the balance. If a payment can't cover the interest accruing at a given rate, the balance never shrinks: the calculator flags this instead of showing a payoff date.
- Not Modeled: Credit score impact, hard inquiries, the temptation to keep spending on a paid-off card, minimum-payment requirements below your stated payment, and the (real) risk of not qualifying for the 0% offer or the 10% loan rate at all, both usually require good-to-excellent credit.
🔒 Nothing typed into this calculator is collected, transmitted, or stored anywhere. Every calculation runs in your browser and disappears the moment you close the tab.