Is a credit card balance transfer fee worth paying?

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.

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.

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 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.

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 (19.24% - 29.24% 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.

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

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.