An Overview of Your Credit Card's Balance Transfer Fee

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If you're unhappy with your current credit card or you've received offers for credit cards with better terms, you may consider taking advantage of a balance transfer deal for a 0% promotional rate. Six to eighteen interest-free months can potentially save you hundreds of dollars on interest and allow you to pay a big portion of your credit card debt. But, before you take the deal, there's a cost to consider: the balance transfer fee.

Wait, Balance Transfers Have a Fee?

Besides purchases, most credit card transactions are charged a fee. That includes balance transfers. A balance transfer fee is a one-time fee you pay when you transfer a balance from one credit card to another. Fortunately, the balance transfer fee is only charged when you make the transaction; you don't have to worry about any ongoing fees. Since the balance transfer fee is added to the balance when it's moved to your credit card, you can pay it over time as you pay off your balance transfer.

How Much is the Balance Transfer Fee?

The typical balance transfer fee is 3% of the amount transferred, with a $5-$10 minimum. If 3% of the transfer amount is less than $5, for example, your balance transfer fee will be $5.

Some credit card issuers charge a lower balance transfer fee for transfers made during the initial months of a new credit card and boost the fee after the initial period.

You can minimize the fee you're charged by making your transfer in the first few days or weeks after opening the account.

It's important to know the amount of the balance transfer fee before you accept the offer and transfer your balance. You can find the amount of the balance transfer fee in the credit card disclosure in the section with other credit card fees.

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 moving a big balance. 

The Balance Transfer Fee Affects the Cost of the Balance Transfer

The goal of transferring a balance is usually to save money on interest, particularly if you're applying for a balance transfer with a promotional APR. Replacing the interest with a high balance transfer fee, may not allow you to save much money. 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. You can use a credit card payoff calculator to estimate the amount of interest you'll pay under your current credit card terms.

The best way to offset the cost of the fee is to pay off your balance before the promotional period ends. Otherwise, the remaining balance accrues interest at the regular rate.

Can You Avoid the Fee?

Balance transfer fees are largely unavoidable. You could try to negotiate a lower fee, but do it before you move the balance. 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.

If you have balance transfer offers from other credit card issues, you can use these to help you talk your way into a low or no balance transfer fee.