What Is a Balance Transfer Fee?
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Written by
Rafaela Stålbalk Klose
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Edited by
Emily Gadd
If you’re drowning in credit card debt, you could get relief from interest by opening and using one of the best balance transfer credit cards. A balance transfer lets you move existing debt from one credit card to another, usually at a much lower interest rate, which can save you money.
This strategy works best when you open a new credit card with a long 0% introductory annual percentage rate (APR) on balance transfers. Moving debt to a balance transfer card can help you focus on paying off what you owe without accumulating interest over a specified period.
But most of these cards charge a balance transfer fee, which you’ll have to pay upfront. And you typically won’t earn credit card rewards on balance transfers or fees.
That said, credit card balance transfer fees can be worth it if you are carrying significant balances with high APRs.
How Much Are Balance Transfer Fees?
Balance transfer fees typically range from 3% to 5% of the transferred amount, depending on the card.
Even though the fee may seem small, it can add up, especially if you’re transferring a large balance. For example, transferring a $5,000 balance with a 3% fee will cost $150 upfront. This fee becomes part of the total balance on the new card, but if it’s less than the interest you’d pay by carrying that balance on a high-interest card, you can come out well ahead.
Why Do Issuers Charge Balance Transfer Fees?
The balance transfer fee is part of how the credit card issuer still generates revenue when it’s not collecting interest.
A transfer fee applies when you move a balance from one credit card to another. Some cards may offer promotional periods where the fee is reduced (or very rarely, waived). It’s critical to review the terms carefully so you know what you’ll owe on your new balance.
Keep in mind that after you’ve transferred a balance, you’re still responsible for making the minimum payment each month, even if you’re not being charged interest for a specified time. Not making the minimum payment has major consequences — for example, you could lose your introductory rate on a 0% APR balance transfer card, and be subject to a penalty fee for a late payment.
Note: You typically can’t transfer balances between cards issued by the same bank.
How Do You Pay the Balance Transfer Fee?
When a balance transfer is initiated, the fee is typically added to the transferred balance on the new credit card.
Suppose you transferred a $10,000 balance to the Wells Fargo Reflect® Card, which charges a balance transfer fee of 5%, min: $5. The balance transfer fee works out to $500 ($10,000 x 5%), so your total amount owing would then be $10,500. But you’d receive a 0% intro APR for 21 months from account opening on qualifying balance transfers (followed by a 17.24%, 23.74%, or 28.99% Variable APR), giving you ample time to tackle your debt.
Can You Negotiate a Lower Balance Transfer Fee?
It may be possible to negotiate a lower balance transfer fee if you have a strong credit history and long-term customer status with the card issuer. An existing, positive banking relationship may help you secure a fee reduction or waiver, though this isn’t common.
If you’re a loyal client, contacting the issuer’s customer service department and asking about available options could be worth a shot. Mentioning competitive offers from other cards with lower or no transfer fees can strengthen your case. Even if the fee isn’t reduced, the issuer may offer other options, such as cards with a longer 0% APR period.
Is a Balance Transfer Fee Worth It?
A balance transfer fee can be worth it if the money you save on interest with a balance transfer is more than the fee itself.
For instance, if you have a large balance on a card with a high interest rate, moving that balance to a card with a 0% APR for a limited period could save you a lot in the long run, even with the fee. The longer the intro APR period, the more time you have to chip away at your debt without being dragged down by interest charges.
The Citi® Diamond Preferred® Card (an advertising partner) is a good example. It doesn’t earn rewards, but it comes with an extra-long 0% intro APR for 21 months on Balance Transfers (then a 17.24% - 27.99% (Variable) APR). Balance transfer fee applies with this offer 5% of each balance transfer; $5 minimum.
It’s important to crunch the numbers and make a plan to pay off your debt before the introductory period expires. If you don’t pay off the balance before the 0% APR period ends, you could end up paying more in the long run.
Frequently Asked Questions About Balance Transfer Fees
How does a balance transfer fee work?
A balance transfer fee is a percentage of the amount you transfer, usually 3% to 5%, added to your new card balance.
How do you avoid balance transfer fees?
It’s difficult to avoid balance transfer fees because most balance transfer cards charge them. Some issuers, especially smaller banks or credit unions, may offer no-fee transfer promotions. However, most cards that don’t charge a balance transfer fee won’t offer a 0% intro APR period. In that case, be sure the card you’re transferring the balance to offers a much lower interest rate than what you’re currently being charged.
You can also try negotiating the balance transfer fee with your current issuer, but your chances are better if you have a long-standing, positive relationship.
Is it a good idea to do a balance transfer?
Yes, a balance transfer can be a great financial tool if the interest savings outweigh the fee and you can pay off the balance within the 0% APR period.
How much will it cost in fees to transfer a $1,000 balance?
Typically, balance transfer fees are 3% to 5% of the amount transferred. On a $1,000 balance, that translates to $30 (3% fee) to $50 (5% fee).
