GLOSSARY · DEBT & HOUSING

Balance transfer

Moving a credit card balance to another card, usually one offering a low or zero promotional rate for a set number of months in exchange for a one-time fee charged as a percentage of the amount moved. It saves interest only if the balance is paid off, or nearly so, before the promotional rate ends and no new spending is added.

Also called: 0% balance transfer, promotional APR, intro APR

FORMULA

Monthly payment to clear it in time = (balance + transfer fee) ÷ promotional months

COMPUTE IT WITH YOUR NUMBERS

Debt payoff planner →If I put $X/month toward my debts, when am I debt-free and which order saves most?

LEARN IT PROPERLY

CHAPTER · UNDERSTANDING YOUR DEBT · FOUNDATIONSWhat Debt Really Costs: APR, Minimums and Fees CHAPTER · UNDERSTANDING YOUR DEBT · FOUNDATIONSDebt Consolidation: When It Lowers the Cost

SOURCES

Regulation Z (Truth in Lending), 12 CFR Part 1026. Consumer Financial Protection Bureau.

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