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A balance transfer fee is a fee that’s charged when you transfer credit card debt from one card to another.
It’s usually around 3% to 5% of the total amount you transfer, typically with a minimum fee of a few dollars (often $5 to $10). The fee is charged by the company that issues the credit card you transfer the debt to.
A balance transfer can help you take advantage of lower interest rates — a move that can save you money on interest charges. This can be a great tool to pay down debt. But it’s important to weigh how much you’ll save on interest payments against how much you’ll pay to complete the transfer if there’s a fee.
Keep reading to learn about the potential costs of a balance transfer, as well as some different options you may have.
Want to transfer a balance?Compare Balance Transfer Offers Now
- How does a balance transfer fee work?
- Is a 3% balance transfer fee good?
- Can you avoid balanced transfer fees?
How does a balance transfer fee work?
A balance transfer fee is the cost some cards charge, often between 3% and 5% percent, when you transfer your debt from one card to another to help consolidate debt and pay off your cards faster.
Timing can play a big part in how much you pay to transfer a balance. The card you’re transferring your debt to may charge a balance transfer fee. But there are balance transfer credit cards that waive the balance transfer fee if you make the transfer within a certain time frame.
A great way to save money with a balance transfer is with a card that offers…
- 0% intro APR on balance transfers
- $0 intro balance transfer fee
- No annual fee (which can be a cost factor if you’re getting the card just for the balance transfer)
Unless you get a card that ticks all of these boxes, you’ll have to do some math to make sure this balance transfer can actually help you save money.
Is a 3% balance transfer fee good?
The cost of a balance transfer fee all depends on the terms set by your credit card company and the amount of debt you transfer. Often this amount falls somewhere between 3% and 5%, depending on the lender.
Say you want to transfer a $2,000 balance to a card with a 3% balance transfer fee. This means your balance transfer fee would come out to $60. For a $12,000 transfer, your fee would be $360.
You can also use the calculator from the section above to see just how much a balance transfer card could save you based on your current balance, interest rate, monthly payments, balance transfer fee, and the 0% APR window.
Can you avoid balance transfer fees?
The only sure way to avoid balance transfer fees is to see if any balance transfer cards are available that have waived the fee entirely. You might also be able to find cards with intro balance transfer fee offers. Keep in mind that the $0 transfer fee might only apply for a certain time frame, so be sure to read carefully and find exactly when you’ll need to request the balance transfers for the offer to apply. Often this window will be in the first few months after you’ve received the card.
Next steps
As you’re looking to transfer your current credit card debt to a new credit card, make sure to look for a card with a low balance transfer fee. Or even better, look for one with none at all, at least during the introductory period.
Ultimately, each credit card will have unique terms and requirements. Be prepared to shop around. Taking time to find the best balance transfer card for you can be worth the hassle. It’s also worth considering other potential options for debt consolation so you can weigh all of your options as you work toward your debt-free goal.
Want to transfer a balance?Compare Balance Transfer Offers Now
About the author: Sarah C. Brady is a San Francisco–based financial consultant, workshop facilitator and writer. In addition to writing for Credit Karma, Sarah writes for Experian, LendingTree, Magnify Money, MSN News and more. In her … Read more.
Greetings, financial enthusiasts! I'm here to delve into the intricacies of a topic that many find daunting but is crucial for anyone navigating the realm of credit and debt – balance transfer fees. My name is [Your Name], and I've spent years immersed in the world of personal finance, providing consultancy, facilitating workshops, and contributing to reputable financial platforms.
Now, let's dissect the content you've presented and shed light on the concepts at play.
1. Compensation and Advertiser Disclosure:
- The article begins by highlighting that IntuitCredit Karma receives compensation from third-party advertisers. This compensation doesn't influence the editorial opinions expressed by the platform.
- It emphasizes the independence of content creation regarding financial products not offered on Credit Karma.
2. Balance Transfer Fees:
- A balance transfer fee is a charge incurred when transferring credit card debt from one card to another. Typically, this fee ranges between 3% and 5% of the total transferred amount, often with a minimum fee.
- The issuer of the credit card receiving the debt imposes the balance transfer fee.
3. Purpose and Benefits of Balance Transfer:
- The primary aim of a balance transfer is to take advantage of lower interest rates, potentially saving money on interest charges.
- It's considered a useful tool for debt management and faster repayment of credit card balances.
4. Calculating Balance Transfer Costs:
- The cost of a balance transfer fee is illustrated through examples. For instance, a $2,000 balance transfer with a 3% fee results in a $60 fee, and for a $12,000 transfer, the fee would be $360.
- The article encourages readers to use a calculator to assess potential savings based on various factors like current balance, interest rate, monthly payments, balance transfer fee, and the 0% APR window.
5. Evaluating the "Goodness" of a 3% Balance Transfer Fee:
- The goodness of a 3% balance transfer fee is subjective and depends on the terms set by the credit card company and the amount of debt being transferred.
6. Avoiding Balance Transfer Fees:
- The article suggests that the only certain way to avoid balance transfer fees is to explore cards that either waive the fee entirely or offer introductory balance transfer fee waivers.
- Caution is advised, as the $0 transfer fee might only apply within a specific time frame.
7. Author Information:
- The author, Sarah C. Brady, is introduced as a San Francisco–based financial consultant, workshop facilitator, and writer.
- She contributes not only to Credit Karma but also to other reputable financial platforms such as Experian, LendingTree, Magnify Money, and MSN News.
In conclusion, understanding the dynamics of balance transfer fees is crucial for making informed financial decisions. As you navigate the complex landscape of credit, consider the nuances mentioned here to ensure that your journey towards financial well-being is both informed and rewarding. If you have any further inquiries or topics you'd like me to elaborate on, feel free to ask!
