Quick interest-savings math (first half). A simple way to estimate one-year interest savings from reducing APR is to multiply the principal by the rate difference. For $5,000 moving from 18% to 6% APR, the rate difference is 12 percentage points (0.18 − 0.06 = 0.12). Multiply 0.12 × 5,000 = $600. So, in simple interest terms, you save $600 in one year. That arithmetic is a useful initial screen to decide whether the refinance or balance transfer is worth investigating further.

What the quick math omits and next steps (second half). The simplified calculation omits amortization effects (if payments change), balance changes during the year, promotional fees (balance-transfer fees, origination fees), and any prepayment behavior. For a complete picture, subtract upfront fees from the first-year savings and consider how long you’ll keep the balance at the lower rate. Also check whether a promotional low rate expires or reverts to a higher APR later. If the net savings (after fees) and the amortization schedule still favor the lower rate, refinancing or a balance transfer may be a smart move.