A lot of people accumulate credit card debt for a number of reasons. For this, banks try to offer financial solutions to provide a breather for customers who want to settle the balances. This is where balance transfer cards enter, providing incredibly lower fees for transferring card debt to a new card. 

Some people associate a balance transfer fee with a balance transfer rate, but these things are completely different. If you decide to move your balances from another card to your new credit card, you need to know about the fees involved in the process. 

In this article, we’re diving deeper into the main differences between the two, and the restrictions per balance transfer. Understanding these fees provide better decisions, whether it’s better to transfer the balance or not. Read on to know more information. 

What’s the Difference Between the Balance Transfer Fee and Rate?

How Balance Transfers Work

Moving the outstanding balance to a new credit card with a better promotional interest rate is a smart move as you incur less interest from the issuing of the bank. Modern credit cards provide more perks, such as no balance transfer fees for a maximum of 24 months. 

How balance transfers work is, you move the balances from another card, to avoid the long-standing interest. Accumulating a balance on the credit card means additional interest, but most people do this because they can’t afford to make full payment. 

Paying only a fraction of the outstanding balance is convenient, but it’s not a good decision as interest piles up. To avoid acquiring massive interest, most consumers transfer the balances to a new card with no to low interest for balance transfers. 

Now, this comes the tricky part where penalties and losing the introductory APR come into the picture. If you’re not careful, you can ultimately lose all your credit card’s introductory APR for massive balance transfers. In addition to losing this promotion, you can also incur penalties for new purchases. 

Difference Between Balance Transfer Fees and Rate

To understand better, the balance transfer rate refers to the interest rate charged each month by the current balance of funds transferred. To put it simply, if you transfer a $1,000 balance to a card, you’re dealing with an interest fee of roughly 3 to 5 percent of this amount monthly. 

Whereas, the balance transfer fee is a one-time penalty charged for transferring a balance from one credit card to another. This already includes administration of the actual funds transferred, but for new credit cards, this is mostly waived. 

To save money, you can get a balance transfer credit card with a longer 0% interest and charges for balance transfers within a specific promotional period. Some issuing bank offers up to 24 months zero balance transfer fee, while others only offer up to 12 months. 

After the promotional period, cardholders will be charged a balance transfer rate for carrying a balance on the credit card. This is in case you failed to settle the balances within the promotional period. Meanwhile, the balance transfer fee is only applicable for every transfer you make on a new card

Is It Better to Transfer Balance to a New Card?

This depends on the new credit card you have, whether the promotional period and offer are generous. High-interest credit cards will probably drain you from the core, and moving to a low-interest card is a good move. 

Meanwhile, if you don’t study the fees involved, and simply transfer just for the sake of removing it to a former credit card, then this is problematic. So, the best way to deal with balance transfers is to study the table of fees from one bank to another, and see how you can save. 

What’s the Difference Between the Balance Transfer Fee and Rate?


Understanding the difference between the balance transfer fee and balance transfer APR is important to better manage credit card debt. Weigh the options available and see the fees involved in making a balance transfer. 

At the end of the day, you will carry these balances for a long, until you’re able to clear everything off your plate. In the meantime, save money by limiting the fees and charges involved when transferring the card balance.