What You Need to Know about Balance Transfer Fees

May 30, 2019

By Sherry Keyles

If you’re trying to eliminate your credit card debt, a balance transfer credit card might be a good option. With a balance transfer, you can pay your debt off faster and potentially save you hundreds of dollars by moving high-interest debt to a new card with an introductory 0% APR offer for a specified period of time (ranges from 12-21 months).

As you sift through balance transfer credit card offers and do the math to figure out if you can pay off your debt before the 0% APR period ends, there’s something you need to add to the equation – a balance transfer fee. Most balance transfer credit cards charge a balance transfer fee on the amount transferred.

What is a Balance Transfer Fee?

A balance transfer fee is a one-time charge for transferring your balance from one credit card to a new card. Typically, a balance transfer is 3% of the amount transferred or $5, whichever is greater. Some cards charge as high as 5% with a minimum of $10.

The balance transfer fee is added to your balance when it’s transferred so you can pay it off as you pay off your balance. There is no maximum amount for balance transfer fees so your fee could over $100 if you are transferring a large balance.

There is no cap on the amount of the balance transfer fee credit card issuers charge, so your fee could be more than $100 if you're transferring a large balance.

How are Balance Transfer Fees Applied?

Most people focus on introductory offer and don’t consider balance transfer fees in their calculations. The main purpose of a balance transfer credit card is to save money on interest.

Depending on your debt amount and the length of the 0% APR offer, balance transfer fees can reduce or eliminate any benefit of the balance transfer.

On the other hand, you may be able to offset the balance transfer fee as long as you pay off your debt within the introductory period. To determine your monthly payment amount, divide your total balance, including the balance transfer fee, by the number of months in the 0% APR offer.

Before you accept a balance transfer offer, make sure you know the balance transfer fee amount. You can find the amount of the balance transfer fee in the credit card disclosure in the section with other credit card fees.

Why do Balance Transfer Fees Matter?

Here are some reasons why it is important to consider balance transfer fees when deciding if a balance transfer is right for your financial situation:

Adds to your debt -With most credit card issuers charging between 3% and 5% on the amount transferred, if you are consolidating debt from several credit cards, your fee will be higher. For example, if your total debt is $10,000 and the balance transfer fee is 5%, you will now be paying $10,500. A balance transfer is supposed to help you reduce debt, not add to it. Most people assume the 0% APR rate will offset the fee, which is not always true. If you fail to pay off your balances before the rate expires, the balance transfer fee has more of an impact.

Paying an expensive fee to transfer money from one account to another - A balance transfer fee of 3 to 5 percent is an expensive way to move money between accounts. Balance transfer fees can be hundreds of dollars if you are transferring balances over a thousand dollars. People often complain about ATM fees but balance transfer fees are a lot more expensive.

Partially negates 0% introductory APR offers - Balance transfer fees actually mean a 0% APR offer is never really 0%. Depending on the amount of your debt, a balance transfer fee could cancel out the savings from the no-interest period or at least partially negate it.

In general, balance transfer fees make sense to pay in order to receive the introductory offer. However, under some circumstances, balance transfer fees can add more debt. Make sure you do your homework and understand if the balance transfer fee is worth paying.

Are there Balance Transfer Credit Cards with no Fee?

Most balance transfer cards charge a balance transfer fee but some available cards do waive the fee. Generally, the fee waiver is limited to the first 45-60 days from card approval so you will need to transfer your balances within the required period.

In order to be approved for a balance transfer card with a 0% APR period and no balance transfer fee, you need very good to excellent credit.

If you do qualify, you should take advantage and apply. While the fee may be small compared to the amount of interest you are saving, avoiding the balance transfer fee can save you hundreds of dollars depending on your debt amount. You can also pay your balance off significantly faster.

Which Cards Do Not Charge a Balance Transfer Fee?

The Chase Slate® card is the most popular balance transfer card without a balance transfer fee. The card offers a 0% introductory APR for 15 months on balance transfers made within 60 days from account opening and offers a $0 introductory balance transfer fee for transfers made within 60 days of account opening. After 60 days, the fee goes up to 5% of amount transferred.

The Amex EveryDay® Credit Card from American Express is another card with a balance transfer fee waiver within 60 days of account opening. Like the Chase Slate card, the 0% introductory APR is for 15 months on balance transfers made within 60 days from account opening and offers a $0 introductory balance transfer fee for transfers made within 60 days of account opening. Credit unions often offer balance transfer credit cards without balance transfer fees but you need to be a member. If you belong to a credit union, check to see what they offer.

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