I have a balance of $5,000 on my credit card, at an APR of 12.99%. I know my APR is not that high compared to some cards, but those zero balance transfer offers I keep getting in the mail are awfully tempting. My question: does it really make sense for me to pay a three-percent balance transfer fee to transfer this balance to a card with lower APR?

Paying a balance transfer fee might seem unnecessary or even like a rip-off, so I understand your concern, but if you take a moment to do the math, the answer will become clear.

At three percent, which is the typical fee, by the way, the fee to transfer your $5,000 balance will be $150. Now, let’s take 12 months as a pay-off period to compare both scenarios.

If you leave your balance where it is and pay it off in one year, you’ll pay $359 in interest charges. Meanwhile, if you take advantage of a one-year zero-percent APR balance transfer offer, all you’ll pay is the $150 balance transfer fee. That’s a savings of $209. Pretty easy to see that doing the balance transfer is worth the fee, if you are going to pay your balance within a year.

It’s important to mention that a downside of any balance transfer offer is that the zero-percent interest time period will eventually expire. This is why, before jumping in, you should look at the ongoing APR that will follow the intro period. Will it be higher than the APR you're paying now? Even if the ongoing APR won’t be much different than your current APR, after a year of making payments without paying a dime of interest, when the new APR kicks in, your balance will be much lower. That means your interest charges will be lower, too, and you'll be able to pay off your balance faster. Any way you look at it, the fee is well worth paying.