You probably receive low APR balance transfer credit card offer on a weekly basis in your mail. However, while the low interest rate on your balance transfer seems very interesting, is it really worth it?

The good news is that there is a clear answer to know how much you save by doing a balance transfer. You just have to carefully read the balance transfer credit card pamphlet and do some calculation.

Looking at how much you do save in interest with a balance transfer.

My calculation will be based on the Platinum Plus MasterCard since it has a balance transfer rate of 1.99% for the first 10 months. It is probably one of the best balance transfer card for Canadians on the market.

So let’s assume you have a $10,000 debt at a regular credit card rate of 15% and you want to do a balance transfer over to the Platinum Plus MasterCard at 1.99% for 10 months.

Scenario #1: No Balance Transfer:

If you keep you 10K balance at 15% and you pay interest only during the next 10 months, you will have to pay $1,250 in interest ($10,000*15%/12*10 months).

Scenario #2: Do a Balance Transfer at 1.99%:

So if you don’t pay your credit card balance but you switch it to a 1.99% interest rate for 10 months, you will only have to pay $165 in interest ($10,000*15%/12*10 months).

So, you save about $1,100 buy doing a balance transfer…. Wait… I told you to read carefully the balance transfer credit card pamphlet. There is a balance transfer fee…

The Balance transfer fee for the Platinum Plus MasterCard is $7.50 or 1% of the amount transferred. Therefore, you will have to pay an extra $100 to proceed with the credit card balance transfer.

Therefore, you will almost save $1,000 over the span of 10 months with the balance transfer to the new credit card. However, you didn’t solve your problem completely as your credit card still needs to get paid.

In addition to this, be careful with the rate after the low APR balance transfer promotion is over. In the case of the Platinum Plus MasterCard, the interest rate after 10 months is 17.99%. You can surely find a low fixed credit card rate after this period to switch it back and start paying it down.