Balance transfers can be a useful way to consolidate your debt without paying high interest fees. While you’ll save some money by paying less interest with a lower introductory rate, this doesn’t mean that balance transfers are cost free. As well as any standard credit card fees, you’ll generally have to pay a one-time balance transfer fee to move your debt over to the card.
Scotiabank Value Visa Card
Eligibility criteria, terms and conditions, fees and charges apply
Purchase interest rate
Scotiabank Value Visa Card
Apply today and enjoy a 0.99% introductory interest rate on balance transfers for the first 6 months.
- Purchase interest rate: 12.99%
- Cash advance rate: 12.99%
- Intro balance transfer rate: 0.99% for the first 6 months
- Standard balance transfer rate: 12.99%
- Annual fee: $29
- Minimum income: $12,000
What is a balance transfer fee?
A balance transfer fee is a charge from your credit card company, typically between 1% and 3% of the transferred amount, however sometimes it can reach as high as 5%. This fee allows you the convenience of transferring your outstanding debt or debts to a new credit card that likely has a promotional period offering little to no interest for anywhere from 6 to 12 months, or sometimes even up to 15 months. The money you save on paying a lower interest rate can then be used to make larger payments to help get you out of debt faster.
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How balance transfer fees are calculated
A balance transfer fee is charged when transferring your existing credit card debt to a new credit card. It’s generally 1% to 3% of the total balance being transferred, but can reach as high as 5%. Usually this fee is set at a minimum amount, and you’ll be required to pay the larger of the two. For example, whichever is greater of either $5 or 3% of the amount of each transfer. If 3% of the amount you are transferring is less than $5, then you will be charged $5. Few banks will put a maximum cap on the transfer fee – most only set a minimum fee.Scenario 1: You’re transferring $10,000 onto a new balance transfer credit card.
The card has a 3% balance transfer fee with no cap.
Since the card has no cap on the fee, you’ll pay $300 ($10,000 x .03 = $300) to transfer the debt.
As you can see, balance transfer fees can add up quickly if you’re transferring a large balance to a card with no cap on their fee.Scenario 2: You’re transferring $10,000 onto a new balance transfer credit card.
The card has a 2% balance transfer fee with a max of $75. Since 2% of $10,000 is $200, you’ll pay just $75 to transfer the debt.
If you’re wondering what fee you’ll be charged to transfer a balance, check the relevant Terms and Conditions of the credit card and you should be able to locate your answer under the “fees and rates” section. If you’re still unsure, contact the provider’s customer service team to confirm what you’ll be expected to pay.