A balance transfer is a great way to cut costs on existing debt. However, many credit cards charge a fee on the transfer which can lead to unexpected costs if you’re not careful. Here’s what a balance transfer fee is and how it works.
How does a balance transfer fee work?
A balance transfer fee is the fee charged by your lender when you balance transfer an eligible debt onto a new credit card. The balance transfer fee is usually 3% to 5% of the entire balance transfer amount. This fee is represented on the balance of the credit card receiving the balance transfer.
For example, if you are transferring $5,000 onto a new card and are charged a 2.5% balance transfer fee, the entire amount of the debt that will appear on the new card is $5,125, which is the $5,000 existing debt and the $125 balance transfer fee. Unlike an annual fee, this fee is only charged once when you first move your balance.
Is it worth paying a balance transfer fee?
It depends. 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.
You may also find a stellar card that doesn’t charge a balance transfer fee and offers a low APR of 10% or less. Depending on your repayment timeline, this situation can save you hundreds of dollars.
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. You’ll want to calculate your repayment period before settling on a balance transfer card.
How to calculate your balance transfer fees
If you’re curious how to calculate the potential costs of a balance transfer, we’ll help you break down the logistics.
For a balance transfer, you’ll typically be charged 3% to 5% of the total balance transferred. Usually, this fee has a flat minimum amount. This is usually written as “$10 or 3%” on the card rates and fees, and you’ll need to pay the greater of these two numbers. If 3% of the amount you’re transferring is less than $5, then you’ll be charged $5. Here are a few examples:
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’ll pay anywhere from nothing to hundreds of dollars on a balance transfer. How much you pay comes down to the amount of debt you’re transferring the credit card receiving the transfer, and how soon you can pay off the balance.
If you want to get an idea of how much you’ll pay on a balance transfer, you can use our balance transfer calculator below.
To use this calculator:
Fill out the amounts and APRs of the cards you’re transferring from.
Use our default values or fill out a card you’re considering transferring your balance to.
Click Calculate and find out what you could save.
Our pick for a balance transfer credit card
Citi Simplicity® Card
No Late Fees, No Penalty Rate, and No Annual Fee... Ever
0% Intro APR for 18 months on purchases from date of account opening and 0% Intro APR for 18 months on balance transfers from date of first transfer. After that the variable APR will be 14.74% - 24.74%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening.
There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater.
The standard variable APR for Citi Flex Plan is 14.74% - 24.74%, based on your creditworthiness. Citi Flex Plan offers are made available at Citi’s discretion.
Stay protected with Citi® Quick Lock and $0 liability on unauthorized charges
This actually depends on the card. Most credit cards will charge either 3% or 5% fee of the amount for a balance transfer. But some credit cards have no balance transfer fees. These are often cards issued by credit unions, although there are some cards issued by banks.
However, there’s a trade-off to having $0 balance transfer fees. Typically cards that come with no balance transfer fees have a shorter 0% intro APR period on balance transfers than the cards with balance transfer fees. Make sure you do the math and choose the option that will save you more money.
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.
Frequently asked questions
Yes. Although your balance won’t accrue interest during the promotional APR period, you’ll still need to pay at least the minimum payment each month.
It depends. In some cases, you may not receive the low introductory rate.
The reason is that transfer promotions usually have set rules defining when and how often transfers can occur. This is set-in-stone information.
In the rare case that you pay off a transfer balance and years later find yourself in a similar situation, you might be able to qualify for another balance transfer with a different provider.
You can also transfer balances to your new card after the intro period has ended, but you’ll pay a balance transfer fee. And you may not get the introductory balance transfer rate — instead, you’ll be charged the purchase rate APR.
This varies from one credit card issuer to the next. Most providers will allow you to transfer 70% to 100% of your credit limit.
Steven Dashiell is a writer at Finder specializing in all things credit cards. With more than 300 articles under his belt, he aims to help readers embrace credit cards and maximize their rewards. Steve is studying to become a Certified Educator in Personal Finance, and is a frequent face on Finder’s YouTube channel, offering the latest in credit card hacks and advice. His expertise has been featured on numerous outlets, including U.S. News & World Report, Time, CBS, Fox Business, Lifehacker, Martha Stewart Living and more.
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.
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4% apr vs 3% fee balance transfer
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