Balance Transfer Fees for Your New Credit Card: The Facts
Many people like to transfer their credit card balances from one card to another. They usually do this because the new card offers a tempting introductory grace period where interest rates on the debt are either zero or very low.
These grace periods, which can last for as long as a year (but almost never beyond that), are the perfect opportunity for people to pay off their debts because they’re free from the crushing burden of a high interest rate. Although transferring the balance on a credit card to a new card is very often a way to save money, it can also cost money in the form of a transfer fee.
Fees from the balance transfer
The fees involved with transferring a balance from one credit card to another can be as low as zero, and as high as 4% of the total balance that you’re transferring. That could be a pretty steep fee if you’re transferring a credit card balance of, say, $10,000. Other credit card companies put a ceiling on their transfer fees, keeping them at $20 or $50.
Beware bait and switch offers
Fees involved with transferring credit card balances are not just limited to the actual transfer transaction itself.
If you read the fine print in many of these wonderful offers, you will see, for example, that the very low rate that tempted you to the new credit card in the first place will vanish if you make one late payment on your balance. That low rate that drew you to it will then be replaced by a new, much higher, and much uglier rate that will defeat the whole purpose of having transferred your balance.
Fees involved with transferring credit card balances are very tricky things, and they tend to be surprises that lurk in the nooks and crannies of the fine print. If you’re going to transfer your credit card balance to a new card, be sure to go over the details of your contract. Better yet, go over it with a financial professional.
