Q: How does a 0% intro APR work for Balance Transfer credit cards? What happens if I have a balance remaining after the 0% APR period? Do I have to pay accrued interest, or does the interest start to accumulate from that point on?
A: The way 0% introductory APR periods generally work on Balance Transfer cards is that during the 0% intro period you pay no interest. Then after the 0% intro APR period is up you pay interest on your remaining balance from that point forward. You do NOT pay accrued interest for the 0% intro APR time period.
For example, if you transferred $600 to a balance transfer card that had a 0% intro APR for 12 months and paid $50 per month towards the balance, at the end of 12 months you’d have no balance left, which is great. Plus, you would have paid no interest on the $600 original balance so you’d have saved a good amount of money by avoiding interest fees.
On the other hand, if you transferred $600 to the same credit card with a 0% intro APR for 12 months and only paid $25 per month towards the balance, you’d be left with a $300 balance at the end of the 12 months. Now going forward you’d need to pay interest on the $300 remaining balance. However, you would not owe any accrued interest for the $300 you paid off during the 0% intro APR period.
A great way to determine which Balance Transfer card is right for you, and to play around with different scenarios to see how much (if any) interest and other fees you’ll be paying is to try out our Balance Transfer Calculator. By using it to enter the amount you plan to transfer and how much you’ll be paying towards the balance each month you’ll see what Balance Transfer card is best for your situation.
If you’re in the market for a great all-around Balance Transfer card, we recommend our top rated Slate® from Chase. Slate features a 15 month, 0% introductory APR on both purchase and balance transfers and no balance transfer fees if you transfer your balances in the first 60 days. Or take a look at all our Balance Transfer credit card reviews, use our Balance Transfer Calculator and pick out the one that matches up with your needs.