Experian Break Even Calculator: What It Does

The Experian break even calculator is a tool that shows how long it takes for the monthly savings from a new credit card balance transfer to cover the transfer fee you pay upfront. You enter your current balance, the transfer fee percentage, your current interest rate, and the new card’s interest rate, and it returns the number of months until the fee is offset by interest savings. The result helps you decide whether a balance transfer is worth the cost.

Formula

The break even point is calculated by dividing the total transfer fee by the monthly interest savings. In symbols:

Break even months = (B × f) / ((B × r_old − B × r_new) / 12)

• B = current balance (dollars)
• f = transfer fee as a decimal (e.g., 3% = 0.03)
• r_old = current APR as a decimal (e.g., 22% = 0.22)
• r_new = new APR as a decimal (e.g., 0% = 0.00)

The numerator is the dollar amount of the fee. The denominator is the monthly interest savings, which is the difference between the old monthly interest and the new monthly interest. The result is the number of months until the accumulated savings equal the fee.

Worked Example

Using the default values from the calculator above: balance = $5,000, fee = 3%, old APR = 22%, new APR = 0%.

1. Transfer fee in dollars: $5,000 × 0.03 = $150
2. Old monthly interest: ($5,000 × 0.22) / 12 = $91.67
3. New monthly interest: ($5,000 × 0.00) / 12 = $0
4. Monthly savings: $91.67 − $0 = $91.67
5. Break even months: $150 / $91.67 = 1.6 months

So with these inputs, the fee is paid off in about 2 months. After that, every month of the 0% period is pure savings.

When to Use This Calculator

Use the break even calculator whenever you are comparing a balance transfer offer against keeping your current card. It is most relevant when the new card has a 0% introductory APR, because that is the common case where a fee is charged. The tool answers a specific question: “How long until I recoup the fee?� If the break even point is longer than the promotional period, you will not save money overall.

For example, if a transfer has a 5% fee and your old APR is 18%, the break even might be 4–5 months. If the promotional 0% period is 12 months, you have 7–8 months of genuine savings. If the fee is 3% and the old APR is 12%, the break even is 3 months, which is still fine for a 12-month offer.

How to Choose the Right Inputs

Accuracy matters. Use the exact balance you plan to transfer, not the total card balance if you are only moving part. The transfer fee is usually a percentage (2% to 5%) but some cards have a minimum dollar amount, such as $5 or $10. If the minimum applies, use the actual dollar fee in the formula instead of the percentage. For the old APR, use your current card’s annual percentage rate, which is on your statement. For the new APR, use the promotional rate (often 0%) or the regular APR if you expect to carry the balance beyond the promo period.

Common Mistakes and Misconceptions

• Ignoring the minimum fee: A 3% fee on a $200 balance is $6, but if the minimum is $5, the actual fee is $6. For a $100 balance, the minimum of $5 is higher than 3% ($3). Use the larger amount.
• Forgetting the promotional period: The break even months must be shorter than the 0% period. If the break even is 8 months and the promo is 6 months, you lose money.
• Assuming you will pay the minimum each month: The calculator assumes you do not make new purchases and that you pay at least the interest due. If you pay more than the minimum, the balance shrinks faster, and the actual savings are lower than the estimate.
• Mixing up APR and monthly rate: APR is annual. Dividing by 12 gives the monthly rate. A 24% APR is 2% per month, not 24% per month.

Limits of the Formula

The break even calculation is a simplified model. It assumes the balance stays constant throughout the period, which means you make no payments and no new charges. In reality, you will make monthly payments, which reduce the balance and thus reduce the interest savings. The formula also ignores late fees, penalty APRs, and the possibility that the new card’s regular APR after the promo period is higher than your old card’s APR. For a more precise estimate, you would need a full amortization schedule that accounts for your planned monthly payment.

Alternatives to a Balance Transfer

If the break even point is too long, consider other options. A personal loan may have a lower fixed rate with no transfer fee, though the APR might be higher than a 0% offer. Negotiating a lower rate with your current card issuer is another route. Some issuers offer hardship programs. You can also simply pay more than the minimum each month to reduce interest faster, which costs nothing upfront. Compare the total interest paid under each scenario, not just the break even months.

Frequently Asked Questions

Does the Experian break even calculator include the balance transfer fee in the balance?

No, the calculator treats the fee as a separate upfront cost. In reality, the fee is often added to the transferred balance, which means you pay interest on the fee if you carry a balance. That would make the break even slightly longer. The calculator gives a conservative estimate because it assumes the fee is paid separately.

What if the new APR is not 0%?

Enter the actual promotional APR, such as 3.99%. The formula still works. The monthly savings will be smaller, so the break even months will be longer. If the new APR is higher than the old APR, the denominator becomes negative, which means there is no break even—you lose money from day one.

Should I use the minimum payment or the full balance in the calculator?

Use the full balance you plan to transfer. The calculator assumes you pay only the interest each month, which is unrealistic but gives a worst-case break even. If you pay more, you will break even sooner, but the calculator’s result is a safe upper bound.

Is a balance transfer worth it if the break even is 3 months and the promo is 12 months?

Yes, generally. You will save interest for the remaining 9 months. However, you must pay off the balance before the promo ends to avoid the regular APR. If you cannot, the savings may vanish. Use the calculator with the regular APR as the new rate to see the long-term picture.

Why does the calculator show months as a decimal?

Because the break even often falls between whole months. For example, 1.6 months means about 7 weeks. In practice, you compare that to the promotional period in months. If the promo is 12 months, 1.6 is clearly fine.

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in balance | Current balance | $ | 5000 | 0
in fee | Transfer fee | % | 3 | 0
in old_rate | Current APR | % | 22 | 0
in new_rate | New APR | % | 0 | 0
out months | Break even months | months | (balance * (fee/100)) / ((balance * (old_rate/100) - balance * (new_rate/100)) / 12) | 1
out savings | Monthly interest savings | $/month | (balance * (old_rate/100) - balance * (new_rate/100)) / 12 | 2