Accessed Feb. 6, 2021. Here, we’ll dive into how balance transfer fees work and examine some strategies for reducing or even avoiding the fee completely. Because the balance transfer fee is added to your balance at the time of the transfer, you can pay it over time as you pay off the balance you've transferred. A consumer considering a balance transfer should calculate the total cost of repaying the current debt over time, with and without accepting a transfer offer. Some cards charge lower fees, but often have a shorter 0% period. Credit card arbitrage involves borrowing money at a low rate from a credit card, then reinvesting it in a higher-rate account to make a profit. What Are Balance Transfer Fees? This fee is represented on the balance of the credit card receiving the balance transfer. The rate the customer actually pays when the teaser rate expires will depend on the individual's credit rating as well as broader market conditions at the time. A balance-transfer fee is the amount of money charged by a lender to transfer existing debt from another lender. So, if you’re transferring a balance of $3,000, a 3% balance transfer fee … For example, if you transferred $150, the fee would be $5, because $150 x .03 is $4.50, which is smaller than the minimum fee. It’s generally 1% to 3% of the total balance being transferred, but can reach as high as 5%. Measure ad performance. The borrower would save $1,700 over the year. Citi Simplicity, once known for its 21-month APR, has decreased the 0% introductory balance transfer rate duration to 18 months. "Typically, the fee is calculated as a percentage of the total balance transferred, normally between 3 and 5 percent," … A balance transfer fee is a charge that a cardholder typically must pay when they transfer a debt to a credit card, and it's usually a small percentage of the transaction amount or a small fixed cost, whichever is higher. Weighing the balance transfer fee against any other promotional terms can help you decide whether to accept a credit card offer and transfer your balance to the new card. Balance transfer fees. A balance-transfer fee is a one-time charge to transfer a balance from one lender to another, often 1% to 3%. The consumer manages to pay off a big chunk of the debt, if not the entire balance, before the teaser rate expires. She holds a degree in business from the University of Alabama. If you transferred a debt of £1,200, then 3% of this would mean you would pay a £36 fee. For example, Chase is no longer accepting online applications for its Slate credit card, which previously offered a 15-month 0% APR on balance transfers. A balance transfer fee is a charge the credit card company can apply for moving a balance from one card to another. The lender discloses future rates usually in broad and variable ranges. Based on our analysis, we’ve found the most expensive balance transfer fee is 5% or $10. The transfer fee and any other fees (such as an annual fee) do not cost more than the consumer saves over the term of the teaser rate. Based on our analysis of 215 balance transfer credit cards, we’ve found that balance transfer fees are typically charged as a percentage of the amount transferred—usually between 3% and 5%, sometimes with a minimum fee of $5 or $10. Advantages and Disadvantages of a Balance Transfer, How to Transfer Credit Card Balances to a New Card. Select personalised content. A balance transfer fee is a one-time fee you pay when you transfer a balance from one credit card to another, usually with a lower interest rate. Balance transfer fees can vary, but are usually either 3% or 5% of the transferred amount. a one-time charge to transfer a balance from one lender to another, often 1% to 3%. Use precise geolocation data. These fees are not optional; they are required in order to … Citi Flex Plan offers are made available at Citi's discretion. Balance transfer cards usually charge you a balance transfer fee of 3% to 5% of the amount transferred, often with a minimum fee of $5 to $10. A balance transfer fee is a fee charged to transfer an outstanding balance to a different credit card. Balance transfer fees increase your annual percentage rate (APR) Your APR is the effective interest … When you transfer balances from one card to … HSBC Gold Credit Card: Good for Interest-Free Purchases, How Debt Consolidation Can Hurt Your Credit. A credit card balance transfer is when you move debt from one credit card to a balance transfer card, often with a 0% introductory annual percentage rate (APR) for a limited time. The allure of a balance transfer is the opportunity to pay off a substantial debt more quickly at a low or even zero interest rate. With a balance transfer credit card, you’ll be expected to pay a balance transfer fee for each transfer made to the card. Balance-transfer fees are common for credit cards that offer a low introductory interest rate. Some credit cards offer an introductory balance transfer rate for new cardholders who transfer a balance within the first few months of opening an account. Offers vary by credit card, so shopping around is key to finding the best deals. Only two credit cards in our findings set a maximum balance transfer fee. You can use a credit card payoff calculator to estimate the amount of interest you'll pay under your current credit card terms. A balance transfer fee is a fee charged by credit card issuers when you transfer a balance. There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater. Get the Basics of Credit Card Balance Transfers, Balance Transfer Survey: Long Deals Have Dwindled But Fees, High Credit Standards Remain, SunTrust Prime Rewards: A Different Kind of Balance Transfer Card, How to Reduce Your Average Monthly Credit Card Payments, Citi Double Cash Card Review: Cash Back with No Annual Fee, Citi Diamond Preferred Review: Great for Reducing Debt Interest Costs. Select personalised ads. Text, A balance transfer is a great tool to save money on interest and pay off credit card debt faster. Calendar with 6 months, 12 months, 15 months. You could try to negotiate a lower fee, but do it before you move the balance. Intro balance transfer APR: 0% for 18 months on balance transfers. If you pay off the balance under a 0% promotional annual percentage rate (APR), you won’t pay any interest on the fee or the balance transfer. What Is the Statute of Limitations on Debt? If you're unhappy with your current credit card or you've received offers for credit cards with better terms, you may consider moving your balance to one with more favorable terms. The best way to offset the cost of the balance transfer fee is to pay off the new balance before the promotional period ends. Unlike purchase transactions, a balance transfer often comes with a fee. While the pricing varies by credit card, balance transfer fees are fairly straightforward. Typically, it will be between 3-5 % of the amount you transfer. Create a personalised ads profile. It works as long as: It should be noted that the bank, in offering the teaser rate, is betting that the cardholder won't pay off the entire balance during the introductory period, or at the very least that they will take on more debt that won't have been paid off before the higher interest rate kicks in. What is a balance transfer fee? How to Do A Credit Card Balance Transfer In 8 Easy Steps, Credit Card Balance Transfer Fees: An Overview, Get to Know the Law That Allows Old Debts to Expire, Average Credit Card Interest Rate Was 20.29% in March 2021, 7 Factors to Help You Choose the Best Balance Transfer Credit Card, Credit Card Balance Transfer vs. Debt Consolidation Loan, Here's How to Tackle Your High Credit Card Balance. If the consumer takes that deal, the total cost of moving the entire $10,000 is $300 (the transfer fee of $100 plus interest payments of $200). The standard variable APR for Citi Flex Plan is 13.99% – 23.99% based on your creditworthiness. A balance transfer fee charges you a percentage of the amount of the debt that you transfer – the typical fee is around 3%, with a minimum of about £3. The balance transfer fee is usually 1-3% of the entire balance transfer amount. In addition, a lender may apply a balance-transfer fee to the deal. This fee is typically 3 percent to 5 percent of the transferred amount. Then 11.99% to 22.99% Standard Variable Purchase APR and up to 5% fee for future balance … The teaser rate and how long it lasts are important, as is the amount of the transfer fee. Balance transfer fee A balance transfer fee is a fee charged by a credit card company to transfer a balance from one account to another. our analysis of 215 balance transfer credit cards. Let’s say you want to transfer a $3,000 balance to a new credit card that charges a balance transfer fee of 3%, or $5, whichever is greater. Citi® Diamond Preferred® Card. You can find the amount of the balance transfer fee in the credit card disclosure in the section with other credit card fees. Convenience checks are blank checks provided by lenders that borrowers can use to access credit lines for purchases, transfers, or cash. A credit card company is permitted to charge you a balance transfer fee on a zero percent rate offer. Once approved, the borrower transfers an existing balance from another credit card to the new card or consolidates debts from a number of lenders into one debt payable to the new lender. A balance transfer fee is typically typically 3% or 5% of the transferred amount. Is Your Credit Card Debt Higher Than Average? A balance transfer fee is the fee charged by your lender when you balance transfer an eligible debt onto a new credit card. If you have competitive balance transfer offers from other credit card issues, you can use these as leverage to help you talk your way into a low or eliminated balance transfer fee. Apply market research to generate audience insights. Since the balance transfer fee is added to the card balance at the time of your transfer, you can pay the fee over time as you pay down your transferred balance. The balance transfer fee is assessed on the credit card balance when it’s moved from your old credit card to the new one. A balance transfer fee is a fee charged for transferring a debt from a credit card or loan to a different credit card. Many credit card issuers have reduced their balance transfer offerings during the COVID-19 pandemic. The bank is betting that the cardholder won't pay off the entire balance during the introductory period. Suppose a credit card issuer offered a promotional interest rate of 2% for an introductory period of 12 months, with a balance transfer fee of 1%. The only way to take full advantage of a balance transfer offer is to commit to paying off the debt, or as much of it as is possible before the introductory offer expires. Fortunately, the balance transfer fee is only charged when you make the transaction; you don't have to worry about any ongoing fees.. For large transfers, the percentage fee will almost always be higher, since the fixed cost is usually only $5 or $10. 3% Intro Balance Transfer Fee until . Balance transfer fees are a one-time fee, not a recurring fee. How Does Debt Consolidation Hurt Your Credit? List of Partners (vendors). The fee is usually a percentage of the total amount transferred. Balance transfer fees can be a percentage of the amount being transferred or a flat dollar amount. See Balance transfer fee survey for more details. Toby Walters is a financial writer, investor, and lifelong learner. Store and/or access information on a device. Banks may not offer balance transfers for free. Create a personalised content profile. After, a 14.74% - 24.74% (variable) APR applies. How Do Balance Transfers Affect My Credit Score? A balance transfer fee is a transaction fee charged by your credit card issuer when you transfer a balance onto their credit card. The annual fee, if any, also should be factored in. There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater. Otherwise, the remaining balance accrues interest at the regular rate. Of course, few things in this world are free; it's likely your balance transfer will come with a fee. Is a Balance Transfer Better for Paying Off Debt Than a Personal Loan? Many credit card companies waive balance transfer fees (which typically range 3%–5% of the transfer amount) to entice cardholders. Most charge balance transfer fees of around 3%-5% of the transferred balance. The typical percentage for balance transfer fees is 3%, though some credit card companies may charge 4% or 5%. 1 The fee then becomes worth the effort and money. There is no cap on the amount of the balance transfer fee for the vast majority of credit cards that offer balance transfers, so your fee could be hundreds of dollars if you're transferring a big balance. More than 7 in 10 0% balance transfer credit cards charge a balance transfer fee, according to WalletHub data. For example, a 3% fee on a $5,000 transfer would result in a total balance of $5,150 on your new card. "What Is a Balance Transfer?" A balance transfer fee is charged when transferring your existing credit card debt to a new credit card. A balance transfer fee is what a credit card company charges on the amount you are transferring over to the new card. You can sometimes avoid this fee by finding a card that doesn’t charge the fee, or temporarily waives it for new cardholders. a fee that’s charged when you transfer credit card debt from one card to another. For example, if you are transferring $5,000 onto a new card and are charged a 2.5% balance transfer fee… The consumer pays a fee to transfer an existing balance to the new line of credit. The fee added to the transfer amount would be $3,000 x .03, which calculates to $90.The minimum flat rate fee would be instead assessed if you’re only transferring a small amount. They might charge you a transfer fee to do so, typically a flat fee or within the range of 3%-5% of the transferred amount. The lender discloses the future rate usually as a broad and variable range, such as 15.24% to 25.24%. What Happens to Credit Card Debt When You Die? The rate typically reverts to a higher percentage after six to 18 months. The majority of balance transfer cards charge a fee when you transfer an existing balance to the new card, which typically ranges from 3% to 5% of the amount of each transfer. On the plus side, some cards offer more generous cash-back deals and miscellaneous other cardholder benefits. The balance transfer fee will usually be charged to your new credit card account on the same day the transferred balance is debited to the account. If the balance transfer fee is higher than the amount of interest you would have paid on the current credit card, transferring the balance isn't worth it. For example, a credit card balance of $10,000 at a 20% interest rate results in an annual interest expense of $2,000, or about $167 per month. Not all credit card deals charge a balance-transfer fee. One strategy for reducing your balance transfer fee is to shop around for a credit card with a lower fee—3% or $5 is on the lower end of balance transfer fees. Measure content performance. This introductory period — usually six months to a year — allows you to make interest-free payments and presumably pay off your debt faster. A balance transfer fee is a one-time fee you pay when you transfer a balance from one credit card to another, usually with a lower interest rate. Is a Balance Transfer Fee Worth the Transfer? Once you're approved for a balance transfer card, you can transfer an outstanding balance to it from your existing credit card (or cards) or even use it to pay outstanding loans. He has a passion for analyzing economic and financial data and sharing it with others. Credit Utilization: The 2nd Biggest Factor in Your Credit Score, Your Debt-To-Income Ratio, and How to Calculate It, How To Consolidate Credit Card Debt on Your Own, Here Is a Look at the Debt Validation Requirements for Collectors, Get Answers to Common Questions About Debt Statute of Limitations, 10 Signs Your Credit Card Debt Is Out of Control and How to Fix It. A fee of 3% is common. Select basic ads. The balance changes based on when and how the card is used. Replacing the interest with a high balance transfer fee may not allow you to save much money. Revolving credit is an agreement that permits an account holder to borrow money repeatedly up to a set limit while repaying in installments. For example, if you move a balance of $5,000 and the transfer fee is 4%, you’ll be charged $200. How balance transfer fees are calculated. Thinking About a Balance Transfer? When you first conduct a balance transfer, you may be required to pay a one-off balance transfer fee of 1% to 3% of the total amount you're moving to the new card. Debt Relief: What Programs Are Available? A credit card teaser rate is a promotion in which a credit card issuer temporarily offers a below-average annual percentage rate (APR) on their cards. Credit card companies offer low-percentage teaser interest rates or introductory rates to entice consumers into applying for cards and transferring balances to them. Fortunately, the balance transfer fee is only charged when you make the transaction; you don't have to worry about any ongoing fees. An Overview of Your Credit Card Balance Transfer Fee, How to Reduce Or Avoid Balance Transfer Fees. There may be a fee involved. A variety of credit card offers is available at any given time, and the wise consumer looks carefully at the terms before making a decision. If you find an offer like this, you can minimize the fee you're charged by making your transfer soon after opening the account. Typically, the goal of transferring a balance is to save money on interest, particularly if you're applying for a balance transfer with a promotional APR. Often, they … The balance transfer fee is usually 3% to 5% of the entire balance transfer amount. A credit card balance is the total amount of money you owe to your credit card company. Call your credit card issuer's customer service and let them know you're interested in transferring a balance, but would like a lower fee. LaToya Irby is an expert on credit cards, credit scores and monitoring, budgeting, and banking products and services. The goal of a balance transfer is saving money, so you want to choose a card that helps you minimize your costs. Discover. Your new starting balance would then tally $3,090. If there is more than one balance to be transferred, there could be several fees occurring on different days. 0% Intro APR † for 14 months on purchases and balance transfers. Develop and improve products. Text, Ask yourself, what's the rate once the promo ends? Look for a card without balance transfer fees. Read These Pros and Cons First. Balance-transfer fees can mean that cardholders with chronic balances end up on a transfer carousel, paying fees to move debt around without ever actually repaying it. The teaser rates can be as low as 0% to 5%. Factors include the relative interest rates and fees, and the amount of time it will take to repay the total debt. Actively scan device characteristics for identification. Balance transfer cards can help you pay down debt without interest for more than a year, but typically there's a catch. The initial rate period refers to a limited period of time at the beginning of a loan when the interest rate is lower. If you have less than stellar credit, it … However, only consumers with very good credit scores are approved for cards with no transfer fee. Put another way, every $1,000 in debt you transfer can cost you between $30 and $50. If you transfer that balance to a credit card that offers a 0 percent introductory APR for 12 months on balance transfers, the new card may charge a transfer fee, typically around 3 percent of the balance. The average fee is equal to about 3% of the amount transferred, with a minimum of $5 or $10. Usually this fee is set at a minimum amount, and you’ll be required to pay the larger of the two. Many balance transfer cards require good or excellent credit. This type of transaction—moving a credit card’s balance to a new card—is known as a balance transfer. Balance transfer fee: There is a balance transfer fee – either $5 or 3% of the amount of each transfer, whichever is greater. $0 Woman with question mark over her head. 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