Balance Transfer Credit Card It can be a valuable tool when paying off high-profit debts. Let’s say your card comes with an introduction to 0% Annual Rate (APR) Offer. In that case, all pennies you pay for your debt will be sent directly to the amount you owe, not to pay interest.
However, while balance transfer credit cards can help you become debt free, there is a price in most cases. Usually, this is in the form of a balance transfer fee. You need to consider that Pros and Cons Remember that of the balance transfer fees before applying for a New Balance Transfer Card, these fees are not necessarily bad deals. Many cardholders who perform balanced transfers are worth paying according to their goals, as they save enough money to pay more interest than offset their fees.
This guide categorizes balance transfer fee details, so you can make healthy decisions before signing up for a balance transfer card.
How much is the balance transfer fee?
Balance transfer fees are charged by the issuer at your own time. I’ll transfer the debt From one loan or credit card to another. These fees are usually a percentage of the total liability transferred and are necessary to take advantage of the balance transfer offer. 0% intro APR period.
Balanced transfer fees are usually 3-5% of the total balance transferred to a new card. So for every $10,000 in debt, you’re borrowing another $300-$500 when you move to a balance transfer credit card. The balance transfer fees you must pay will vary depending on the card you sign up for, and the fee amounts must be listed in the fine print of your credit card agreement.
Most balance transfer fees are typically $5 or $10 with a minimum fee. With these minimums in place, if you are transferring only small amounts of debt (such as $50 or $100), you can pay 3% or more of the balance transfer fee.
How does balanced transfer fee work?
you Transfer balance The new card will add a fee to the amount of the transferred debt. So let’s say you transfer $5,000 to a New Balance Transfer Card that charges a 3% balance transfer fee. In this case, you will begin repayment of your new card with a $5,150 balance updated. This amount includes the liability remitted ($5,000) plus a 3% balance transfer fee ($150). you Transfer multiple balanceseach balance transfer fee will be charged.
Consider the balance transfer fees and how this affects the total transfer. There is a credit limit for balance transfer cards Just like any other credit card, your balance transfer fees contribute to the amount of limits you are using. This is the same as your debt.
If the card limit is too low, and if the overall balance and balance transfer fees are too low to transfer, you will need to transfer a small amount first, then lower the transferred balance a little, then move the rest to the card.
How to avoid balance transfer fees
Usually, the only way to avoid balance transfer fees is to find a card that completely abandons the fee. These types of cards are usually issued by credit unions, as opposed to major credit card issuers. You may not find much Credit Union Card with no balance transfer fee It also offers, for example, a long 0% introductory APR.
In addition to finding a card with a waived balance transfer fee from the Credit Union, you may also run into a regular credit card with an offer for an intro balance transfer fee, or you may extend the offer from one of your current credit card issuers. In that case, the issuer will waive any fees for transfers completed within a certain period. However, these offers are rare. So, unless you choose a credit card that is completely exempt from your balance transfer fee, be prepared to consider the fee for you Repayment plan.
How to negotiate a balance transfer fee
There’s no need to Cancel balance transfer If you are unhappy with the price, plan it. You can try to negotiate your balance transfer fee by talking to a customer service representative. There is no guarantee that you will have luck, but you can call the card issuer and make a claim. Depending on the situation, they may be able to negotiate the balance transfer fee for the existing offer. Still, you’d want to state the case using as many details as possible.
When negotiating your balance transfer fee, be sure to do the following:
- Please check your credit score. Check your credit score Before applying for a balance transfer card. If you have a FICO score, you can negotiate terms with the card issuer. It’s so good, it’s great range.
- Compare balance transfer offers. Next, we need to compare the top balanced transfer cards in the market from those perspectives. Introductory APR Offer And how long will they last? Other factors should also be compared, such as compensation and annual fees. When narrowing down your search, please check the balance transfer fee for the card you are considering. This is usually in the range of 3-5% of your balance. Comparing offers will give you a better understanding of which options are available and which cards are best suited to your financial needs.
- Do math. one time Decide what card you like In the best case, know how much you have to pay with your current balance transfer fee requirements and what you can potentially save if you negotiate.
- Call the card issuer and insist. At this point, you have established the balance transfer card you plan to sign up with the listed fees. Call the issuer and ask them to speak to a customer service agent over the phone. Explain that you want to pay a lower balance transfer fee. In some circumstances, you may be able to negotiate the fees for your existing offers. There may be a new balance transfer offer in the pipeline and the agents you are talking to may be able to share those details. If your customer service representative does not have the authority to discuss any of these details with you, you can ask a supervisor.
When is the balance transfer fee worth it?
There are many scenarios where paying your balance transfer fees is valuable to your finances. Here are some:
When you are not interested when you want to go to your principal for your payment
If you need to pay back your credit card debt and want to make sure that all your payments are headed towards the principal rather than your interest, it is probably worth paying the balance transfer fee. Despite the fees, you will save a substantial amount on interest payments you would have paid using the New Balance Transfer Card with a 0% Intro APR offer.
For one bank rate credit card writer, the balance transfer fee was absolutely worth it. I used Seychelle Thomas CitiSimplicity® Card* Pay back $4,000 high profit credit card debt over 21 months. She paid a 5% balance transfer fee and took advantage of the implementation offer totalling $200.
It paid off when I saw how much money she saved.
“When I paid back my balance, I saved over $1,300 on interest and fees.” Plus, paying off debts with a balance transfer card – it will ultimately help you, regardless of the balance transfer fee charged. Credit score. Over the course of 21 months, Thomas initially had a lower score, but over time her credit score recovered.
If you need a longer introductory APR period
Whether you pay a credit card balance transfer fee or qualify for another card that doesn’t charge a balance transfer fee depending on the introductory APR offer for each card, it’s worth it. For example, if you have to pay a fee, Longer Introductory APR Period (e.g. 18 or 21 months) or a relatively short intro APR period (e.g. 6 months). This could lead to more time to repay a larger balance at an introductory 0% interest rate.
Let’s take a sample of a card with a balance of $5,000. Transfer it to your balance transfer card with a 0% intro APR offer for 18 months and a 3% balance transfer fee. Furthermore, let’s say you have a current card 20.35% Variable APR. According to Bankrate Credit Card Payoff Calculator,This takes you how long it takes for you to repay each card and what you pay in interest is:
| Starting Balance | Monthly payment | A few months to pay off your card | Interest paid | |
|
0% APR no credit card |
$5,000 | $300 | 20 | $946 |
| 0% APR Balance Transfer Card 3% BT Fees apply | $5,150 | $300 | 18 | $0 |
In this example, you pay a total of $5,946 over 20 months to repay your card at the usual fee. On the other hand, you can repay it in 18 months by transferring your debt to a balance transfer card (or 17 cases if you are willing to pay $350 on your final payment).
If you need a 0% intro APR offer, then more than just a profit offer
Not all credit union balance transfer cards offer an introductory 0% APR. You will know you are eligible for a card with no balance transfer fees, but you will need to pay a low interest rate while you are paying off your debt. In this case, it may be worth it to simply acquire a card with the balance transfer fee.
When is the balance transfer fee worth it?
Since there aren’t many balance transfer credit cards that don’t involve balance transfer fees, it’s usually worth paying to take advantage of the card’s 0% introductory APR offer.
If you can find a credit card that qualifies you, you won’t have a balance transfer fee, but it may not be worth signing up for a card that has a fee instead. Here are other scenarios where it might be best to skip the fee.
When your debt is small enough to pay off without a balance transfer
Balance transfer fees may be worth avoiding if the amount you think you’re going to transfer is small enough to quickly repay it without the help of a balance transfer card. For example, you may have three credit cards that you have debts, but only two of them are on your high profit card. It may be best to transfer only these two balances to the balance transfer card and leave the third balance alone.
In this case, it may be best to first pay off your card paying one-third of that interest, then focus on paying back the 0% APR Period Card debt. However, we assume that other balances can be repaid during the referral period.
If your card has a deferred interest offer and is not a 0% interest offer
It is also important to note the type of introductory interest period your potential balance transfer card offers. If a card is provided Deferred interest Interest is not 0%, and the balance left on your card at the end of the intro period means that even if the remaining balance is $1, you will be charged all interest your card has accumulated since the balance was transferred first. In that case, the balance transfer fee is Bad thoughts.
If you are unable to pay your balance by the end of the introductory period, you will never want to pay your balance transfer fees in addition to what you have to pay in interest.
Conclusion
There is Many options to consider Regarding debt management, such as balance transfer credit cards Debt settlement method. To investigate all options, including options from credit unions, spend some time knowing what options are best for your needs.
Pay balance transfer fees to use one of Best Balance Transfer Credit Card It may be a good choice that will help you avoid hundreds of dollars in interest, but you need to run the numbers first. Bankrate Balance Transfer Calculator It will help you understand which cards can help you pay off your debts at an affordable price.
Frequently Asked Questions about Balance Transfer Fees
*Information about CitiSimplicity® cards is collected independently by Bankrate.com. Card details have not been reviewed or approved by the card issuer.
