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Credit Cards

Is a credit card balance transfer fee worth paying?

You may be considering a balance transfer, but is paying the fee worth it?

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A balance transfer credit card is an excellent way to refinance existing credit card debt, especially since credit card interest rates can go as high as 30%. By transferring your balance to a card with a 0% intro APR, you can quickly dodge mounting interest costs and give yourself repayment flexibility.

However, there's typically a fee to complete a balance transfer, and it's usually 3%. But is it worth paying?

Below, Select calculates what the fee will look like on your balance transfer, and what balance transfer credit cards are available.

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Is a balance transfer fee worth it?

If you have a significant amount of credit card debt, the 3% balance transfer fee (or sometimes even a 5% fee) is absolutely worth paying when transferring your balance to a card that has a 0% intro APR offer, but only if you still need time to pay off a balance. The alternative option of paying high interest rates on your current card isn't a financially sound decision.

However, if you can pay off your balance immediately and in full on your current card, that is more ideal. You'll save on any new interest fees as well as a balance transfer fee.

But what do the numbers actually look like if you do decide to execute a balance transfer?

Crunching the numbers

If you have the following balances, this is what a 3% balance transfer fee looks like:

  • $500 balance transfer = $15 fee
  • $1,000 balance transfer = $30 fee
  • $2,000 balance transfer = $60 fee
  • $5,000 balance transfer = $150 fee
  • $10,000 balance transfer = $300 fee

Once you get into larger figures, you may want to consider a different financial product to refinance your credit card debt like a personal loan or personal line of credit. In addition, a large balance on a balance transfer credit card could negatively impact your credit score.

But let's say you had a $2,000 balance on a credit card like the Chase Sapphire Preferred® Card. The interest rate on the card ranges from 16.24% - 23.24% variable, based on credit worthiness with either $5 or 5% of the amount of the transfer, whichever is greater. Even on the low end and paying $100 per month, it will cost you an extra $338 in interest to pay off over 23 months. That is much more than a $60 fee for a 3% balance transfer.

If you have a $5,000 balance (with a 15.99% APR) and plan on paying at least $750/month, the balance transfer fee is still significantly less than the $271 in interest you'd pay. And even if you pay $1,000/month, the $150 fee is still less than the collective interest.

This goes to show how credit card debt can rack up quickly, and by paying a small fee, you can quickly dodge a bullet and give yourself more repayment flexibility.

Note that some credit cards charge a 5% balance transfer fee, so make sure to read the fine print before executing a transfer. A 5% balance transfer fee will change the math above, but can still be worth it.

How to pick a balance transfer credit card

There are several balance transfer credit cards available, and many of them offer nearly identical benefits. However, you should pick a card based on your personal needs. When you're comparing balance transfer cards, keep these few points in mind:

  • Length of intro offer: How long do you think you will need to pay off your balance in full? Based on that, you'll be able to find a card that offers a 0% intro APR on balance transfers that works for you. For example, if you think you can pay your balance in full in less than 18 months, the Citi® Double Cash Card offers a 0% intro APR for balance transfers for the first 18 months of card membership (14.74% - 24.74% variable after that). Balance transfers must be completed within 4 months of account opening.
  • Other benefits: If you're also shopping for a new credit card, there are balance transfer credit cards with benefits like cash-back rewards on purchases and travel insurance.

Best balance transfer credit cards

Here are a few of our favorite credit cards with a 0% APR introductory offer and a 3% balance transfer fee:

U.S. Bank Visa® Platinum Card

On U.S. Bank's secure site
  • Rewards

    None

  • Welcome bonus

    None

  • Annual fee

    $0

  • Intro APR

    0% for the first 20 billing cycles on balance transfers and purchases

  • Regular APR

    15.24% - 25.24% (Variable)

  • Balance transfer fee

    Either 3% of the amount of each transfer or $5 minimum, whichever is greater

  • Foreign transaction fee

    2% to 3%

  • Credit needed

    Excellent/Good

See rates and fees and our methodology, terms apply.

Pros

  • 20 billing cycles of no interest on balance transfers and purchases
  • No annual fee
  • Cell phone protection plan

Cons

  • No rewards program
  • 2% to 3% foreign transaction fee
  • Balances must be transferred within 60 days from account opening

Citi® Double Cash Card

On Citi's secure site
  • Rewards

    2% cash back: 1% on all eligible purchases and an additional 1% after you pay your credit card bill

  • Welcome bonus

    No current offer

  • Annual fee

    $0

  • Intro APR

    0% for the first 18 months on balance transfers; N/A for purchases

  • Regular APR

    14.74% - 24.74% variable on purchases and balance transfers

  • Balance transfer fee

    For balance transfers completed within 4 months of account opening, an intro balance transfer fee of 3% of each transfer ($5 minimum) applies; after that, a balance transfer fee of 5% of each transfer ($5 minimum) applies

  • Foreign transaction fee

    3%

  • Credit needed

    Good/Excellent

See our methodology, terms apply.

Pros

  • 2% cash back on all eligible purchases
  • Simple cash-back program that doesn't require activation or spending caps
  • One of the longest intro periods for balance transfers at 18 months

Cons

  • No welcome bonus, so you can’t maximize rewards during the first few months of card opening
  • Minimum cash-back redemption of $25
  • 3% fee charged on purchases made outside the U.S.
  • Estimated rewards earned after 1 year: $443
  • Estimated rewards earned after 5 years: $2,213

Wells Fargo Active Cash® Card

On Wells Fargo's secure site
  • Rewards

    Unlimited 2% cash rewards on purchases

  • Welcome bonus

    $200 cash rewards bonus after spending $1,000 in purchases in the first 3 months

  • Annual fee

    $0

  • Intro APR

    0% intro APR for 15 months from account opening on purchases and qualifying balance transfers; balance transfers made within 120 days qualify for the intro rate

  • Regular APR

    15.74%, 20.74%, or 25.74% variable APR on purchases and balance transfers

  • Balance transfer fee

    Introductory fee of 3% ($5 minimum) for 120 days from account opening, then up to 5% ($5 minimum)

  • Foreign transaction fee

    3%

  • Credit needed

    Excellent/Good

See rates and fees and our methodology, terms apply.

Pros

  • Unlimited cash rewards
  • $200 cash rewards welcome bonus
  • No annual fee
  • Introductory APR period for first 15 months
  • Access to Visa Signature Concierge
  • Get up to $600 cell phone protection

Cons

  • 3% fee charged on foreign transactions

Bottom line

In almost all cases, a 3% balance transfer fee is worth paying, and sometimes even a 5% fee. Credit cards have extremely high interest rates, and because of that, credit card debt can be very difficult to get out of. A way to avoid spiraling credit card debt is to do a balance transfer on a card with an introductory 0% APR offer, but this is not a sustainable practice.

Before you spend on credit cards, it's extremely important to have a solid budget in place, as well as sound financial habits. Without these in place, you could find yourself in steep debt.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.