You have $15,000 in credit card debt at 22% APR and just got approved for a 0% balance transfer card. The offer promises 18 months of no interest, which sounds like the perfect solution. What the big letters don't tell you is that the 3% transfer fee costs you $450 upfront, and the math only works if you actually pay off the balance before the promotional period ends.
The break-even calculation is straightforward. Your current card charges $275/month in interest at 22% APR. The transfer fee is $450. You break even after 1.6 months, meaning any balance you carry beyond that makes the transfer worthwhile. But here's the catch - if you can't pay off the full balance in 18 months, you're paying 24-29% APR on whatever remains.
Do this: divide your total debt by the number of promotional months. For $15,000 over 18 months, that's $833/month. If you can't afford that payment consistently, a balance transfer just delays your problem and costs you $450 in the process. You'd be better off with a personal loan at a fixed 10-12% rate that gives you 3-5 years to repay.
The savvy move is finding cards with no transfer fee - they exist but typically offer shorter promotional periods like 12-15 months. Run the numbers on both options. Sometimes paying $450 upfront for 18 months beats no fee for 12 months, especially if those extra 6 months let you avoid paying interest on $5,000-10,000.
Never use a balance transfer card for new purchases. Most cards apply your payments to the 0% balance first, meaning any new charges sit there accruing 24% interest until you pay off the entire transferred amount. This sneaky term structure has cost people thousands in unexpected interest charges. Transfer your debt, cut up the old card, and use cash or debit until you're debt-free.