For promoting the development of public transit, many cities implement the policy of time-limited free transfer to encourage urban residents to travel by transit. In order to study the influence of the policy on the urban residents" travel mode, this paper utilizes the principle of utility maximization to improve the disaggregate model, and establish the choice model of travel mode for urban residents. The travelers’ features, such as age, monthly income, occupation, travel distance and travel time are investigated before and after the implementation of transit time-limited free transfer policy in Qingdao, and the corresponding data obtained. The model has tested with survey data, and the result shows that the error of transit travel sharing rate is 1.65% between the value of the model calculation and the value of direct calculation used by survey data in the condition of time-limited free transfer, demonstrating the accuracy and effectiveness of the model. The proposed travel choice model provides a new method to predict the transit travel sharing rate in a city after implementing the time-limited bus free transfer policy.