No Balance Transfer Fee Doesn’t Mean Best Deal


Consumers looking to execute balance transfers typically look for offers with no fee.

But nowadays those usually aren’t the best deals, considering it’s near impossible to find a 0% APR balance transfer with no fee.

If the balance transfer doesn’t come with a fee, there’s a very good chance it’ll come with APR above 0%.

Let’s look at an example:

Balance transfer offer: 4.99% APR for 12 months, 12.99% APR thereafter
Balance transfer fee: no fee
Credit card balance: $5,000

In this scenario, you’d avoid paying a balance transfer fee, but you’d be stuck paying 4.99% APR on your transferred balance.

Using simple math, that would be roughly $250 in finance charges annually, or about $21 a month.

Now consider another balance transfer credit card with 0% APR for 12 months and a 3% balance transfer fee.

You’d pay $150 upfront in fees, but you wouldn’t pay any finance charges during the first year (roughly $100 in savings).

This could help you get out of debt faster as payments would go entirely to the principal balance and not to pay off interest.

As a result, you’d probably be able to reduce your debt a lot quicker, making the balance transfer with a fee the better deal!

However, if you plan to pay off all the debt in just a few months, moving the balance with a no fee balance transfer could make more sense, as you’d only pay a few months of interest.

Tip: Currently very few credit card issuers offer balance transfers with no fee, opting instead to charge a fee so they can continue to offer 0% APR promotional periods.

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