Balance transfer fees: What they are and how to avoid them

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Balance transfer credit cards can act as a valuable tool if you need to pay off debt at high interest rates—most balance transfer cards allow you to avoid paying interest for more than a year.

During that period, every penny you pay toward your debts goes directly toward the amount you owe instead of interest. However, there is one minor detail that often throws consumers off when researching the best balance transfer credit cards—the presence of balance transfer fees.

What is a balance transfer fee?

A balance transfer fee is a fee charged by credit card issuers when you transfer a balance from another credit card to your new balance transfer card. These fees are not optional; they are required in order to take advantage of balance transfer offers, most of which let you enjoy 0 percent APR for a limited period of time.

How much do balance transfer fees cost?

Balance transfer fees typically add up to 3 percent or 5 percent of the total balance you transfer to your new card. This means that for every $10,000 in debt you move to a balance transfer credit card, you’ll owe $300 or $500.

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?

Balance transfer fees are added to your transferred debt amount when you facilitate a balance transfer to your new card.

Let’s say you transfer $5,000 in high-interest credit card debt to a new balance transfer card that charges a balance transfer fee of 3 percent. 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).

Learn more: How does a balance transfer affect your credit score?

Best credit cards without a balance transfer fee

There are normally quite a few balance transfer credit cards without a balance transfer fee on the market, but the coronavirus pandemic led many card issuers to alter their debt consolidation offerings. As of today, there are only a few balance transfer credit cards that don’t charge a balance transfer fee, including the following:

Wings Visa® Platinum Credit Card

The Wings Visa Platinum Credit Card is a very basic product without any major perks. This card does give you 0 percent APR on purchases and balance transfers for a full 12 months, however, followed by a variable APR of 8.15 percent to 18 percent. There’s no annual fee and you won’t pay any fees to transfer a balance.

You can qualify for a minimum credit line of $500, but you do have to be a member of Wings Financial Credit Union to apply. Membership is available to consumers who work in the aviation industry or live in select metro areas surrounding cities like Atlanta, Detroit, Orlando and Seattle, as well as parts of Minnesota and Wisconsin.

Wings Member Cash Rewards Visa® Signature Card

The Wings Member Cash Rewards Visa Signature Card also requires membership with Wings Financial Credit Union.

If you’re eligible, however, you can earn 1.5 percent cash back on all your spending and a $100 bonus after you spend $1,000 on your card within 90 days of opening your account.

You’ll also qualify for 0 percent APR on purchases and balance transfers for 12 months, followed by a variable APR of 14.2 percent to 18 percent. You won’t pay an annual fee or any balance transfer fees with this card.

SunTrust Prime Rewards Credit Card

The SunTrust Prime Rewards Credit Card doesn’t offer 0 percent APR, but you can qualify for a three-year introductory interest offer at the prime rate (currently 3.25 percent variable APR) on balances transferred during the first 60 days of account opening. After that, you’ll pay a variable APR rate of 11.24 percent to 21.24 percent.

You won’t pay any balance transfer fees for balances transferred during the first 60 days after you open your account, but the balance transfer fee goes up to 3 percent (minimum $10) after that.

This card also gives you an unlimited 1 percent cash back on each dollar you spend, and you’ll get a $100 statement credit when you spend $500 on your card within three months of account opening. No annual fee applies.

How to choose a balance transfer card

There aren’t many balance transfer credit cards that let you avoid a balance transfer fee right now, so you may want to broaden your search to include balance transfer cards with a fee.

The key to selecting a balance transfer card that charges a fee is making sure your introductory APR offer lasts long enough to let you enjoy considerable interest savings and that the hassle of transferring a balance will be worth it.

Here are some of the main factors to consider as you compare credit cards with balance transfer offers:

  • Compare 0 percent APR offers: When you compare the top balance transfer credit cards, you’ll find that many offer 0 percent APR for well over a year. Longer offers can help you buy time to pay off your debt without any interest, which can make up for any balance transfer fees you have to pay.
  • Do the math on balance transfer fees: Paying a balance transfer fee is generally worth it, as fees cost 3 percent or 5 percent of your balance at most and you only pay the fee once, whereas the average credit card interest rate is around 16 percent. You can use a balance transfer fee calculator to determine how much you could save, even after paying a balance transfer fee.
  • Consider the ongoing variable rates: Keep in mind that introductory rates don’t last forever, so make sure you know how the variable rates on cards you’re considering stack up. If you don’t pay off your debt during your card’s introductory period, you’ll be stuck paying the variable interest rate after that.
  • Look for cards that offer perks you’ll use: You should also consider whether the cards you’re researching offer any benefits you might enjoy long term. For example, if you love to travel, a credit card with great airline mile rewards or travel insurance benefits might suit your needs for many years.

Balance transfer alternatives

If you don’t want to pay a balance transfer fee but do want to pay off debt faster, there are other options you can consider.

Personal loan

A personal loan can offer fixed interest rates, fixed monthly payments and a fixed repayment schedule, often without added fees. Personal loans tend to have considerably lower interest rates than most credit cards.

If you think you might struggle to pay off your entire balance by the time your intro APR period ends and will end up carrying a balance with your card’s regular APR, you might be better off using a personal loan.

Granted, you won’t have a 0 percent interest period, but your regular interest rate will likely be much lower (possibly as low as 6 percent) than what you’ll get on a credit card after your intro APR expires (the current average is 16 percent). A fixed repayment timeline and predictable monthly payments make personal loans a good option if you need more than 18 months to pay off your balance.

Home equity loan

If you have considerable home equity, you could also consolidate debt with a home-equity loan or home equity line of credit (HELOC). Both of these options let you use your home equity as collateral and often come with considerably lower rates than credit cards charge (some as low as 3.25 percent, depending on your creditworthiness and the equity in your home).

Paying off your debt

Finally, don’t forget that you can pay off debt the old-fashioned way. If you want to pay off your debt as quickly as possible, reduce spending in other areas of your life and put as much money as you can afford toward your credit card payments each month. You can also follow the debt snowball or debt avalanche repayment methods to help stay on track.

The debt snowball method entails paying as much as you can toward your smallest balances first while making minimum payments on the rest. The debt avalanche method has you pay as much as you can toward your highest interest balance first while making minimum payments on the remaining debt.

Both strategies lead you toward paying off your debts one at a time until you have no debts left. It can be helpful to choose whichever strategy is more motivating for you.

The bottom line

If you’re struggling with debt, you’re certainly not alone. Fortunately, there are many options for you to consider, such as balance transfer credit cards and debt consolidation.

Make sure you spend some time researching all your options so you know which one will work best for your needs. Paying a balance transfer fee to utilize one of the best balance transfer credit cards is often a good choice, but you should run the numbers to find out.

The information about the Wings Visa Platinum Card, Wings Member Cash Rewards Visa Signature Card and SunTrust Prime Rewards Credit Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuers.

Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson began her career working in the funeral industry, which may make you wonder why she works in personal finance now. Yet, the funeral industry taught the author everything she needs to know about the value of one's money and time. Johnson left the mortuary business a decade ago in order to explore her passion for personal finance and travel the world, and since then, she and her husband have built a debt-free lifestyle that has them on the path to retire very wealthy in their 40s. Holly's love of budgeting also led to the creation of her debt payoff book, “Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love."
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