Transferring your credit card balance comes with fees, but you can legally avoid them. Here are 5 smart methods to dodge balance transfer fees and maximize savings.
Transferring a credit card balance to a new card with a lower interest rate can save money on finance charges. However, most balance transfer credit cards charge a one-time balance transfer fee that’s typically 3-5% of the amount transferred . While this fee eats into your savings, there are ways to minimize or avoid paying it.
How balance transfer fees work
When you transfer a balance from one card to a new card, the company issuing the new card often charges a one-time balance transfer fee. This fee is usually a percentage of the total amount transferred.
For example, if you transfer $5,000 to a new card with a 3% balance transfer fee, you would pay $150. This $150 fee gets tacked onto your balance on the new card.
Some credit cards offer an introductory 0% APR on balance transfers. Even these cards often charge a balance transfer fee, typically 3% to 5%.
So while you can avoid interest charges for a period of time, you still have to pay the upfront balance transfer fee.
5 Ways to Avoid Balance Transfer Fees
While most balance transfer credit cards charge a fee, there are a few options to avoid paying it:
1. Use a card with an intro 0% APR and no balance transfer fee
A small number of credit cards offer a 0% introductory APR on balance transfers with no balance transfer fee. Examples include the Wells Fargo Reflect Card and BankAmericard Credit Card [2].
The intro 0% APR period on these cards typically lasts 12-18 months. Just make sure to pay off your entire transferred balance before the intro period ends. Otherwise, you’ll start paying a high variable APR on any remaining balance.
2. Negotiate with your credit card company
If you have a good payment history with your current credit card company, you may be able to ask them to waive the balance transfer fee. This is more likely to work if you’ve had the card for several years.
Before requesting a fee waiver, check that you meet the credit card company’s criteria. For example, some may require you to have made minimum payments on time for the past 12 months.
If the company won’t waive the fee entirely, ask if they’ll reduce it by a percentage (like 50%). Getting even a partially reduced fee can add up to decent savings.
3. Use a 0% APR purchase offer instead
Rather than doing a balance transfer to a new card, consider using a 0% intro APR purchase offer on an existing credit card.
For example, your credit card company may send you offers periodically for 0% APR on new purchases for 12-18 months. Instead of actually making new purchases, use this limit to pay off your existing balance on that card over time.
Just make sure this type of offer comes with no balance transfer fee. And be sure to pay off the entire amount before the 0% intro period ends to dodge deferred interest.
4. Take out a personal loan
Personal loans often have lower interest rates than credit cards — generally under 10% APR for people with good credit [3]. And most personal loans don’t come with any transfer fees.
So you could take out a personal loan to pay off your existing credit card balance in full, avoiding any balance transfer fees in the process. Just shop around to find the lowest interest rate possible on a personal loan.
5. Use a credit union balance transfer offer
Credit unions sometimes offer balance transfer deals with lower fees than major credit card companies.
For instance, PenFed Credit Union offers balance transfers with no fee for the first 60 days [4]. Navy Federal Credit Union runs periodic balance transfer promotions with reduced fees [5].
So consider joining a local credit union to potentially take advantage of fee-reduced balance transfer offers.
Alternatives to balance transfers
Sometimes, a balance transfer may not make financial sense even if you can get the fee waived or reduced. Other debt payoff methods like debt consolidation loans or debt management plans could save you more over time.
Debt consolidation loans
Similar to a balance transfer, debt consolidation loans allow you to roll multiple debts into one new loan with a lower interest rate. This helps you save on interest charges while paying off debt faster.
Balance Transfers or Debt Consolidation, Which is Best in 2024 and Why?
Debt management plans
Debt management plans arranged by credit counseling agencies can lower interest rates and fees on credit cards. The agency negotiates with card companies on your behalf to create a repayment plan that works with your budget.
Be sure to run the numbers to see if an alternative like one of these makes more sense than a basic balance transfer between credit cards before deciding.
The bottom line
While many balance transfer credit cards charge a costly one-time transfer fee, you’re not necessarily stuck paying it. Shop around for cards offering introductory balance transfer promotions with no fee or negotiate with your current provider to waive all or part of the fee.
Smart use of 0% APR purchase offers personal loans, credit union deals, and debt payoff programs can also help sidestep balance transfer fees. But run the calculations to confirm if transferring a balance even makes sense for your financial situation before pursuing alternatives too.
Back to HomeSources
[1] WalletHub – Balance Transfer Credit Cards
[2] WalletHub – Credit Cards with No Balance Transfer Fee
[3] WalletHub – Alternatives to Balance Transfers
