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. This type of transaction—moving a credit card’s balance to a new card—is known as a balance transfer. Unlike purchase transactions, a balance transfer often comes with a fee.
While the pricing varies by credit card, balance transfer fees are fairly straightforward. Here, we’ll dive into how balance transfer fees work and examine some strategies for reducing or even avoiding the fee completely.
What Are Balance Transfer Fees?
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. Fortunately, the balance transfer fee is only charged when you make the transaction; you don't have to worry about any ongoing fees.
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. 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.
How Much Are Balance Transfer Fees?
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. Only two credit cards in our findings set a maximum balance transfer fee.
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. 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 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.
How Do Balance Transfer Fees Work?
The balance transfer fee is assessed on the credit card balance when it’s moved from your old credit card to the new one. 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. 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. 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.
Many credit card issuers have reduced their balance transfer offerings during the COVID-19 pandemic. 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. Citi Simplicity, once known for its 21-month APR, has decreased the 0% introductory balance transfer rate duration to 18 months.
Is a Balance Transfer Fee Worth the Transfer?
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. 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 balance transfer fee is to pay off the new balance before the promotional period ends. Otherwise, the remaining balance accrues interest at the regular rate.
How to Reduce Or Avoid Balance Transfer Fees
Based on our analysis, we’ve found the most expensive balance transfer fee is 5% or $10. 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.
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. If you find an offer like this, you can minimize the fee you're charged by making your transfer soon after opening the account.
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 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.