A Brief Guide to the Balance Transfer Fee

If you have used a credit card before, you have probably seen the phrase “balance transfer”. At times, there are fees and interest attached to a balance transfer, and at times there is a waiver on it altogether.

Are the fees the same as the rates when it comes to balance transfers? And, what is the difference between fees and rates where a balance transfer is involved, if there are any?

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Find out more about balance transfer fees, how they work, and how they differ to balance transfer rates in this article.

A Brief Guide to the Balance Transfer Fee
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Balance Transfer Fees

The balance transfer fee is an amount charged by your credit card issuer when you transfer your balance from another card. The fee is a one-time charge, and in most cases, it is waived for a period of time. This waiver usually comes an an incentive to get you to sign up for the card.

For example, a transfer fee could be around 5% of the transferred balance. For every transfer that you make, you have to pay the 5%. However, during the waiver period, there will be no fees charged if you make a transfer with the card.

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The Difference Between Balance Transfer Fees and Balance Transfer Rates

There’s a big difference between a balance transfer rate and a balance transfer fee. A balancer transfer rate is an APR interest rate that the balance transfer will be charged at. This means that while a balance transfer fee is a one-time charge, the balance transfer rate is charged monthly.

The balance transfer fee for most cards is between 3% to 5% for balance transfers and can be waived for a period of time.

Meanwhile, a balance transfer rate may be offered at a 0% introductory rate on balance transfers for a promotional number of months. This means that within the first six months of opening the account when you transfer your balance there’s no interest charged.

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Advantages of Balance Transfer Fees

When it comes to balance transfer fees, there are some advantages. With balance transfers, you have the ability to clear off the substantial debt quickly and at a lower interest rate.

This is achieved by moving the balance of one credit card, currently accruing interest at a high rate, to a new card with a promotional balance transfer rate that charges a lower rate.

By doing this, you lessen your interest payments over time, which means you can pay off your debt more quickly.

Are Balance Transfer Fees Worth It?

A Brief Guide to the Balance Transfer Fee
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First of all, you should know that you can negotiate the balance transfer fee with the issuer, especially if you’re a new customer.

Always weigh your options carefully before you sign up for the card, this is if you’re going to use the card to carry your balance.

A balance transfer and its associated fee is worth the struggle if you have high debt and prefer to have one consolidated payment each month. A balance transfer card that has low fees and rates can help you clear away major debt with ease.

Conclusion

There are a lot of terms that apply when credit cards are involved and balance transfer fees are among them.