What are balance transfer fees and how to avoid them | finder.com

What is a balance transfer fee?

It's what you pay to transfer your debt.

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A balance transfer fee is when a credit card company charges a fee to move your debt to their card — usually a flat fee of $5 to $10 or a percentage between 2% and 5%.

If you’re looking to transfer a balance from one card to another, you’re looking for a deal. Credit card companies bank on customers overlooking or disregarding a transfer fee as insignificant.

But if you do the math — transferring an $8,000 balance with no APR would cost an additional $400 with a 5% transfer fee. So now you’re debt has grown to $8,400.

How balance transfer fees are calculated

When transferring your existing credit card debt to a new balance transfer credit card you’ll typically be charged 3% to 5% of the total balance transferred.

Usually, this fee has a flat minimum amount, and you’ll be required to pay the larger of the two. For example, either $5 or 3% of the amount of each transfer, whichever is greater. If 3% of the amount you’re transferring is less than $5, then you’ll be charged $5. Few banks will cap the transfer fee — most only set a minimum.

Scenario 1:
You’re transferring $10,000 to a new card. The card has a 3% balance transfer fee with no cap. Because the card has no cap on the fee, you’ll pay $300 since $10,000 x .03 = $300. 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 the fee.

Scenario 2:
You’re transferring $10,000 to a new card. The card has a 2% balance transfer fee with a max of $75. Because 2% of $10,000 is $200, you’ll pay just $75.

If you’re wondering what fee you’ll be charged to transfer a balance, check the terms and conditions of the card. You should be able to find your answer under the fees and rates section.

If you’re still unsure, contact the provider’s customer service team to confirm what you’re expected to pay. You may find out that you don’t have to pay one at all.

You can also calculate what you’d save with various balance transfer fees using our calculator.

How to compare no-fee balance transfer cards

To find the best no-fee balance transfer card for you, consider what will benefit you most:

  • Intro APR.
    Some no-fee balance transfer cards offer a 0% intro APR on balance transfers, which can provide a break from interest.
  • Ongoing APR.
    Will you pay off your debt before your intro APR ends? If not, consider what the ongoing APR will be.If you plan on carrying debt for a long time, low-APR cards might be a more attractive option, even if you have to start paying interest on your balance immediately.
  • Annual fee.
    An annual fee can knock off a bit of your savings from a balance transfer card, so factor it in when you’re doing the math.
  • Ongoing balance transfer fees.
    If you plan on transferring balances over long periods of time, confirm whether your card offers no fees indefinitely or only for an intro period.

Compare balance transfer credit cards

%
Name Product Amount saved Balance transfer APR Balance transfer fee Recommended minimum credit score Filter values
0% intro for the first 15 months (then 16.24%, 22.24% or 26.24% variable)
3%
670
Earn unlimited 1.5% cash back on every purchase, every day.
0% intro for the first 18 months (then 13.24%, 17.24% or 21.24% variable)
$10 or 4% of the transaction, whichever is greater
670
An 18 months 0% intro APR period on both purchases and balance transfers, plus zero foreign transaction fees, makes this is a strong well-rounded card. See Rates and Fees
0% intro for the first 12 billing cycles (then 15.99% to 25.49% variable)
$5 or 3% of the transaction, whichever is greater
670
When you spend $500 on your card within the first 90 days, you’ll receive a $150 cash back bonus. Rates & Fees
0% intro for the first 12 months (then 14.99% to 25.99% variable)
$5 or 3% of the transaction, whichever is greater
680
Earn $250 bonus cash back after you spend $1,000 on purchases in the first 3 months. Rates & fees
0% intro for the first 12 months (then 15.24%, 19.24% or 25.24% variable)
$10 or 4% of the transaction, whichever is greater
670
Earn 3% cash back on up to $10,000 in the first 12 months, then 1.5% on all purchases. See Rates and Fees.

Compare up to 4 providers

Are intro balance transfer fees a good deal?

It depends. You may find a stellar card that doesn’t charge a balance transfer fee and offers a low APR of 10% or less. This situation can save you hundreds of dollars.

If you’re transferring a high amount to a credit card with a 0% intro APR for 12 months, you’ll likely pay less in transfer fees than you would in interest.

However, no-fee balance transfer cards often come with short 0% intro APR periods — or none at all. If you don’t pay off your balance by the time the promotion expires, your remaining debt might be assessed at a higher interest rate. With no 0% intro period, you’ll start paying interest on balance transfers immediately.

Tips to keep in mind with no-fee balance transfer cards

When you’re looking for a no-fee balance transfer card, consider the following:

  • Offer terms.
    The no-fee transfer period may expire. Read the fine print to make sure you can take advantage of not having to pay a balance transfer fee.
  • Look for other fees.
    You may be drawn to a card that offers a $0 fee for transfers, but costs $100 a year to use. Make sure the card’s other fees don’t negate what you saved in your transfer fee.
  • Compare savings.
    You may save more by paying a transfer fee and enjoying a 0% intro APR for 12 or more months. Make sure you do the math to see which deal saves you the most money.
  • Number of transfers.
    Some credit cards give you unlimited transfers for no fee, while others limit you to only one fee-free transfer.

Balance transfer calculator

To use this calculator:

  1. Fill out the amounts and APRs of the cards you’re transferring from.
  2. Use our default values or fill out a card you’re considering transferring your balance to.
  3. Click Calculate and find out what you could save.
Card #1
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Card that you are transferring to:

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Disclaimer: While every effort has been made to ensure the accuracy of this calculator, the results should be used as indication only. Certain assumptions have been made around the repayments made. This calculator is neither a quote nor a prequalification for a credit card.

Bottom line

If you’re committed to getting out from under your debt, finding a balance transfer card can help. Evaluate your needs, the fees and APR of your new card and what will save you the most money in the long run.

No-fee cards with low APRs can help, but make sure you compare your balance transfer options before you decide on a new balance transfer credit card.

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2 Responses

  1. Default Gravatar
    ZiaOctober 20, 2018

    4% apr vs 3% fee balance transfer

    • Avatarfinder Customer Care
      AnndyOctober 22, 2018Staff

      Hi Zia,

      Thanks for your question.

      The 4% APR is the amount of interest you will pay for any unpaid balance transfer amount. On the other hand, the balance transfer fee is a one-off payment that is charged when transferring your existing credit card debt to a new credit card.

      We can easily understand the difference between the two if we set a sample figure. Say, you are transferring $10,000 and your options include credit card A with 4% APR and no balance transfer fee and credit card B with 0% APR on balance transfers but charges 3% balance transfer fee.

      Credit card A will charge you about $400 on the first month and this may go down on the second month if you are able to reduce your principal balance by paying more than the required minimum repayment.

      Credit card B will charge you a one-off $300 balance transfer fee which is normally charged on your first billing after credit card approval. This is the only time you will incur this fee.

      I hope this helps.

      Cheers,
      Anndy

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