How to Calculate a Balance Transfer
There are a number of steps you need to take to calculate a credit card balance transfer. When you have all the available information, you can make the process flow easy. Anyone doing a balance transfer will incur some fees. Whenever there are late payments, you could lose your low promotional rate which can cause you to incur more finance charges as well as an increase in payments. A balance transfer has many benefits designed to help you meet your financial goals.
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Instructions
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Features
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1
Get all of the features of your credit card if you want to calculate a balance transfer, such as the interest rate, balance and the date of last payment.
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Take the annual percentage rate and divide by 360 and multiply it by the number of days in the billing cycle which is usually 30, and then multiply that by the balance. This will give you the amount of finance charges needed to add to the principal balance for a payoff. Use the date of last payment instead of 30 days if you have your billing statement.
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Subtract any payments that may have been mailed but are not reflected on your billing statement.
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Use this same formula if you have two different types of balances. Each balance may be subject to a different interest rate. Your purchases may have a lower rate than your cash advances.
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Call the company that is going to handle the balance transfer and give the representative the payoff balance and the account number of the balance transfer. Give the representative the address for which the balance should be sent.
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Use the new rate of interest to see how much you can save by doing a balance transfer. If your old rate of interest is 15 percent with a balance of $10,000, your finance charges for 30 days are $124.98. If your new rate is 7 percent, your finance charges for 30 days will be $58.32. You save about $66.66 per month for the first month.
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Tips & Warnings
Credit card companies use different methods to calculate finance charges so there could be a slight discrepancy. You could also use a balance transfer calculator.
Late payments will cancel your promotional interest rate.
