What are balance transfer fees and how to calculate them | finder.com
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What is a balance transfer fee?

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Here’s what you may have to pay when you consolidate your debt.

When you’re considering a balance transfer, you’re looking to save money on paying down your debt. So why would you pay a fee to move your money from one account to another? Balance transfer fees — usually between 2% and 5% — are fees credit companies charge you to move your debt to their card.

What is a balance transfer fee?

A balance transfer fee is a fee credit card companies charge to move your debt to their card — usually a flat fee of $5 or a percentage between 2% and 5%. Promotional offers of 0% APR for 12 months for a balance transfer look appealing to those looking to pay down debt fast. But, if you read the fine print, you’ll find the transfer fee.

Credit card companies charge balance transfer fees because they can. If you’re looking to transfer a balance from one card to another, you’re looking for a deal. Credit card companies bank on new customers overlooking or disregarding a transfer fee as insignificant. But if you do the math — transferring a $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

A balance transfer fee is charged when transferring your existing credit card debt to a new credit card. It’s generally 3% to 5% of the total balance transferred. Usually this fee is set at a 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 will be charged $5. Only a very few banks will cap the transfer fee — most only set a minimum.

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.Because the card has no cap on the fee, you’ll pay $300 ($10,000 x .03 = $300). As you can see, balance transfer fees can add up quickly if you are 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. 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.

How to find a no-fee balance transfer card

To help you decide on the best no-fee balance transfer card for you, consider these criteria:

  • Intro APR. Some cards offer 0% APR on balance transfers, which can provide you 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.

Comparison of Balance Transfer Credit Cards

Updated September 22nd, 2018
Name Product Introductory Balance Transfer APR APR (Annual Percentage Rate) for Purchases Annual Fee Minimum Credit Score
0% for the first 15 months (then 14.74%, 18.74% or 24.74% variable)
14.74%, 18.74% or 24.74% variable
$0
Fair (660-699)
Earn unlimited 1.5% cash rewards on purchases. See Rates and Fees
0% for the first 18 months (then 12.74%, 16.74% or 20.74% variable)
12.74%, 16.74% or 20.74% variable
$0
Fair (660-699)
An 18-month 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% for the first 15 billing cycles (then to variable)
16.74% variable
$195
Enjoy unique excursions, privileged access to exclusive events and insider opportunities.
0% for the first 15 billing cycles (then to variable)
16.74% variable
$495
Good (700-739)
Mastercard Black Card members receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
0% for the first 15 months (then 14.74% to 25.74% variable)
14.74% to 25.74% variable
$0
Fair (660-699)
Earn 10,000 Membership Rewards® Points after you use your new Card to make $1,000 in purchases in your first 3 months.
0% for the first 15 months (then 14.74% to 25.74% variable)
14.74% to 25.74% variable
$0
Fair (660-699)
Snag a $150 bonus statement credit after you spend $1,000 in the first 3 months
0% for the first 12 months (then 14.74% to 24.74% variable)
14.74% to 24.74% variable
$95
Fair (660-699)
15,000 Membership Rewards points after you spend $1,000 in the first 3 months of opening your account
0% for the first 12 months (then 14.74% to 25.74% variable)
14.74% to 25.74% variable
$95
Fair (660-699)
Earn $200 bonus cash back after you spend $1,000 in the first 3 months
0% for the first 15 months (then 16.74% to 25.49% variable)
16.74% to 25.49% variable
$0
Fair (660-699)
Jumpstart your financial fitness! 60 day introductory balance transfer offer, save on interest, and get your free monthly credit score.
0% for the first 15 statement closing dates (then 14.74% to 24.74% variable)
14.74% to 24.74% variable
$0
Fair (660-699)
Transfer high rate balances and save on interest with an Introductory $0 balance transfer fee for the first 60 days your account is open. After that, the fee for future balance transfers is 3% (min. $10).
0% for the first 15 months (then 16.74% to 25.49% variable)
16.74% to 25.49% variable
$0
Fair (660-699)
Earn unlimited 1.5% cash back on every purchase - it's automatic. No minimum to redeem for cash back.
0% for the first 12 statement closing dates (then 14.99% to 24.99% variable)
14.99% to 24.99% variable
$0
Good (700-739)
Earn more cash back for the things you buy most.

Compare up to 4 providers

Are credit cards with no balance transfer fees better offers?

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% APR for 12 months, you’ll likely pay less in transfer fees than you would in APRs.

However, no-fee balance transfer cards often come with short 0% 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 high interest rate. With no 0% intro period, you’ll start paying interest on balance transfers immediately.

And watch out for other fees for cash advances, an annual fee and foreign exchange fee.

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 a free transfer.
  • Look for other fees. You may be drawn to a card that offers $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% APR for 12 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 other limit your $0 transfer to only one.

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 options before you decide on a new balance transfer credit card.

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Adrienne Fuller

Adrienne Fuller leads the publishing team at finder.com. She has one goal: to deliver the accurate and transparent information she wishes she had when she made some of life's important financial decisions. When she's not helping folks save money, she's hiking with her two Catahoulas around her home in San Diego.

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