What Is a Balance Transfer Fee?

Credit cards are a major modern convenience--nearly everyone has at least one. Unfortunately, those who carry balances on their credit cards are often saddled with sky high interest rates that can make getting out of debt very difficult. Credit card companies frequently offer teaser interest rates on balance transfers, so that new customers can move their large, high-interest balances to a card with a lower rate, at least for a while. These offers look good on paper, but there is usually a balance transfer fee attached that can eat into those savings.


When you transfer a balance from one credit card to another, the receiving card will often charge a balance transfer fee. The fee does not benefit you in any way--it is simply the credit card company's way of making some money off of the transaction.


This fee may be expressed as a percentage or a flat rate. Most companies charge a percentage of the amount being transferred, usually between 1 to 3 percent. On a balance of $1000, that would result in a fee of $10 to $30. This type of fee is usually capped between $75 to $100. Flat fees are much less common, but can range anywhere from $50 to $100 or more.


There are a few cards available that do not have balance transfer fees, but they are becoming increasingly hard to find. Generally, excellent credit is required for cards with no balance transfer fees.


The balance transfer fee terms and conditions will be spelled out with all of the other rules in the Cardmember Agreement, often in very fine print. If you cannot find the terms of the balance transfer fee or you do not understand them, contact the credit card company for clarification before executing the balance transfer.


Different cards from the same company will have different rules governing balance transfers, so if you are looking for a balance transfer deal, be sure to read the fine print carefully. Also, special balance transfer offers are regularly sent out via U.S. mail, so instead of throwing those offers away, read them and compare to find the one that is right for you.