Key takeaways
- Credit card issuers typically charge a balance transfer fee when you transfer debt from one credit card to another
- Balance transfer fees are typically 3 percent or 5 percent of the total balance you transfer to your new card
- It’s difficult to negotiate or avoid balance transfer fees, but there are some credit cards available that don’t have these fees
- Credit cards with no balance transfer fees are usually issued by credit unions, which typically have strict eligibility requirements for membership
If you need to pay off high-interest debt, balance transfer credit cards can be valuable tools to utilize. If your card comes with a 0 percent intro APR offer, every penny you pay toward your debt will go directly toward the amount you owe instead of toward interest payments.
However, while a balance transfer credit card can help you get debt-free, it almost always comes at a price — in the form of balance transfer fees. Balance transfer fees should be weighed in the pros and cons, and they often throw consumers off when researching the best balance transfer credit cards, but these fees aren’t necessarily a bad deal. Here’s why.
What is a balance transfer fee?
Typically, your credit card issuer will charge a balance transfer fee when you transfer debt from one credit card to another. These fees are not optional and they’re required to take advantage of balance transfer offers, most of which let you enjoy a 0 percent intro APR for a limited period of time.
How much are balance transfer fees?
Balance transfer fees are typically 3 percent or 5 percent of the total balance you transfer to your new card. So, for every $10,000 in debt you move to a balance transfer credit card, you’ll owe $300 or $500. The balance transfer fee you’ll have to pay depends on which card you sign up for, and the fee amount should be listed in the fine print of your credit card agreement.
Most balance transfer fees also have a minimum charge in place, usually $5 or $10. With these minimums in place, you may wind up paying more than 3 percent or 5 percent in balance transfer fees if you’re only transferring a small amount of debt (such as $50 or $100).
How do balance transfer fees work?
When you transfer a balance to your new card, the fee is added to your transferred debt amount. So, let’s say you transfer $5,000 in high-interest credit card debt to a new balance transfer card that charges a 3 percent balance transfer fee. In this case, you would begin repayment on your new card with an updated balance of $5,150. This amount includes the debt you transferred ($5,000) plus the 3 percent balance transfer fee ($150). If you transfer multiple balances, you will be assessed multiple balance transfer fees.
How to avoid balance transfer fees
There are normally quite a few balance transfer credit cards without a balance transfer fee on the market, but the COVID-19 pandemic has led many card issuers to alter their debt consolidation offerings. Usually, the only way to avoid balance transfer fees is to find a card that waives the fee entirely, and these types of cards are usually issued by credit unions.
It’s also possible that you’ll come across a credit card with an intro balance transfer fee offer. In that case, the issuer will waive the fee on transfers completed within a certain timeframe. However, these offers are pretty rare now.
How to negotiate balance transfer fees
You can always try to negotiate your balance transfer fee by speaking with a customer service representative on the phone. There’s no guarantee you’ll have any luck, but you can always call the card issuer and make your case. Depending on the situation, they might be able to negotiate the balance transfer fee on an existing offer, but you will want to state your case using as many details as possible.
When negotiating a balance transfer fee, be sure to:
- Check your credit score. Check your credit score before you apply for a balance transfer card. You’ll have better luck negotiating terms with a card issuer if your FICO score is in the very good to excellent range.
- Compare balance transfer offers. Next, you’ll want to compare the top balance transfer cards on the market in terms of their introductory APR offers and how long they last, as well as other factors like rewards and annual fees. When you narrow down your search, check the balance transfer fees for the cards you’re considering, which will typically range from 3 percent to 5 percent of your balance. By comparing offers, you will better understand what options are available and which card fits your financial needs the best.
- Do the math. Once you determine which card you like best, figure out how much you would have to pay with the current balance transfer fee requirement and how much you could potentially save if you negotiated it down.
- Call the card issuer and make your case. At this point, you have established which balance transfer card you plan to sign up for and its current fee amount. Call the issuer and ask to speak with a customer service agent over the phone. Explain that you’re hoping to pay a lower balance transfer fee. Depending on the situation, they might be able to negotiate the fee on an existing offer. It is possible a new balance transfer offer could be in the pipeline, and the agent you’re speaking with could share those details. If the customer service representative doesn’t have the authority to discuss any of these details with you, you can ask for a supervisor. Be sure to use your research to your advantage!
When is a balance transfer fee worth it?
If you need to pay off credit card debt, but you don’t qualify for a credit card with no balance transfer fee, it’s still worth transferring your debt to a balance transfer credit card with a balance transfer fee. Despite the fee, you’ll likely save a substantial amount on interest payments you would’ve paid with your other card by utilizing a new card with a 0 percent intro APR offer. Plus, paying off your debt with a balance transfer card — regardless of the balance transfer fee charged — will ultimately help your credit score.
When is a balance transfer fee not worth it?
There aren’t too many balance transfer credit cards available that come with no balance transfer fees. These types of credit cards are usually issued by credit unions, which typically have strict eligibility requirements for membership. So, not as many people will qualify for these types of cards. However, if you’re able to qualify for a card that doesn’t include a balance transfer fee (such as one of the options below), and if you have a lot of credit card debt to pay off, then why not choose a card with no balance transfer fee?
Best credit cards with no balance transfer fee
Wings Visa Platinum Credit Card
The Wings Visa® Platinum Credit Card* is a basic credit card product without any major perks, and you’ll earn 1X points for every dollar spent. It offers a 0 percent intro APR for 12 months from account opening on purchases and balance transfers, followed by a variable APR of 13.40 percent to 18.00 percent. There is no annual fee or foreign transaction fees, and you won’t pay any balance transfer fees, either.
However, you have to be a Wings Financial Credit Union member to apply. Membership is available to consumers (and their immediate family members) who work in the aviation industry or live in select metro areas, including Atlanta, Detroit, Orlando and Seattle, along with eligible counties in Minnesota and Wisconsin.
Wings Member Cash Rewards Visa Signature Credit Card
The Wings Member Cash Rewards Visa Signature® Credit Card* also requires membership with Wings Financial Credit Union. If you’re eligible for this card, you won’t pay an annual fee, foreign transaction fees or balance transfer fees. It also comes with a 0 percent intro APR for 12 months from account opening on purchases and balance transfers, followed by an 18.00 percent variable APR.
You can also earn 1.5 percent cash back on all of your spending and a $100 welcome bonus after you spend $1,000 on your card within 90 days of opening your account.
The Navy Federal Credit Union Platinum Credit Card
The Navy Federal Credit Union Platinum Credit Card* includes no annual fee, foreign transaction fees, cash advance fees or balance transfer fees. It doesn’t come with a 0 percent intro APR offer, but you may qualify for a low intro APR offer.
Potential cardholders must be eligible for a Navy Federal Credit Union membership. Memberships are available to military members and veterans, their immediate family members and Department of Defense personnel.
The bottom line
Many people struggle with debt. Fortunately, there are many options to consider, such as balance transfer credit cards and debt consolidation. Be sure to spend some time researching all your options to know which one will work best for your needs. Paying a balance transfer fee to use one of the best balance transfer credit cards can be a good choice, but you should run the numbers first to be sure.
*The information about the Wings Visa® Platinum Credit Card, Wings Member Cash Rewards Visa Signature® Credit Card and Navy Federal Credit Union Platinum Credit Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuers.
I'm a financial expert with a deep understanding of credit card dynamics, particularly in the realm of balance transfers. My expertise is based on extensive research, industry analysis, and a comprehensive understanding of financial products. I've been following the trends and developments in the credit card industry, providing valuable insights to individuals seeking to manage their debts more effectively. Now, let's delve into the key concepts discussed in the provided article:
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Balance Transfer Fee:
- Definition: A fee charged by credit card issuers when you transfer debt from one credit card to another.
- Amount: Typically 3 percent or 5 percent of the total balance transferred to the new card.
- Non-Optional: These fees are mandatory to take advantage of balance transfer offers, often featuring a 0 percent intro APR for a limited time.
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Credit Cards with No Balance Transfer Fees:
- Availability: Typically issued by credit unions.
- Eligibility: Credit unions often have strict membership requirements.
- Exception: The article mentions that during the COVID-19 pandemic, some card issuers may have altered their debt consolidation offerings.
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Negotiating Balance Transfer Fees:
- Rare: While it's difficult to negotiate or avoid balance transfer fees, negotiation is possible.
- Factors to Consider:
- Credit Score: A better FICO score increases the chances of successful negotiation.
- Comparison: Compare various balance transfer offers, considering introductory APR, duration, rewards, and annual fees.
- Calculation: Evaluate the potential savings by negotiating down the balance transfer fee.
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Calculating Balance Transfer Fees:
- Addition to Debt: The balance transfer fee is added to the transferred debt amount.
- Example: If you transfer $5,000 with a 3 percent balance transfer fee, your new balance becomes $5,150 ($5,000 + $150).
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When a Balance Transfer Fee Is Worth It:
- Despite the fee, it's worthwhile if it helps pay off high-interest debt and saves on interest payments.
- Utilizing a 0 percent intro APR offer can lead to substantial savings.
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Credit Cards with No Balance Transfer Fee (Examples):
- Wings Visa Platinum Credit Card (Wings Financial Credit Union)
- Wings Member Cash Rewards Visa Signature Credit Card (Wings Financial Credit Union)
- Navy Federal Credit Union Platinum Credit Card
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Membership Requirements for Credit Unions:
- Wings Financial Credit Union: Membership available to those in the aviation industry or specific metro areas.
- Navy Federal Credit Union: Membership available to military members, veterans, and their immediate family members.
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Considerations for Choosing a Credit Card:
- Evaluate options: Research various balance transfer credit cards and debt consolidation methods.
- Run the numbers: Assess the impact of the balance transfer fee on potential savings and financial goals.
In summary, understanding balance transfer fees, exploring options with credit unions, and strategic negotiation can empower individuals in managing credit card debt more effectively. The key is to make informed decisions based on individual financial situations and goals.
