What is a Balance Transfer Fee, and Why Should You Care?

If you have credit card debt or loans that have a high-interest rate, a balance transfer to a different credit card with a lower interest rate can save you money over the long term. Most balance transfers also charge a one-time balance transfer fee. It’s important to know how much you’ll pay in balance transfer fees to determine how much a credit card balance transfer will save you.

What is a balance transfer?

A balance transfer is a way of paying off existing credit card debt by moving it to one of your other credit cards or opening a new one. Transferring your balance from a high-interest credit card to a low-interest credit card can save you money. But most credit cards also add a balance transfer fee to your transfer amount.

If you want to transfer a credit card balance to another card you have, you can call customer service or go online to request a balance transfer. Your credit card company will tell you the interest rate you’ll pay on the balance transfer and any balance transfer fee you'll pay.

Some credit cards offer new customers lower fees and interest rates on balance transfers, so shop for the best offers.

What is a balance transfer fee?

A balance transfer fee is a percentage of your balance transfer, usually with a minimum dollar amount. The fee is added to the amount you transfer. For example, if you transfer a $1,000 credit card balance and pay a 3% balance transfer fee. Your total balance on the new card will be $1,030.

Balance transfer fee example

Citi offers new customers a 0% introductory APR on balance transfers for 18 months after opening a new Citi Double Cash card (current in April 2023). That card has a 3% balance transfer fee. If you transferred a $1,000 balance to a new Double Cash card, your balance would be $1,030. You'd have 18 months to pay off the balance before Citi charges any interest. That can save you a lot of money in interest and give you more time to pay down your debt.

Is it worth it to pay a balance transfer fee?

Whether a balance transfer fee is worth paying depends on a few ‌questions:

1. How much is the balance transfer fee? A high balance transfer fee can eat up a lot of the money you save in interest.

2. How much lower is the new interest rate? The bigger the difference from your current rate, the more you’ll save.

3. How long will it take you to pay off the balance? If you plan to repay it immediately, it’s probably not worth paying a balance transfer on top of what you already owe.

Here are a few examples of current balance transfer offers:

Pro tip: Know how to spot a deferred interest offer

A 0% balance transfer and a “0% interest for X months” offer may appear similar in your search, but they aren’t the same. Sometimes, 0% interest is a deferred interest offer.

Balance transfer: Interest doesn’t start to accrue on the transferred balance until the promotional period is over.

Deferred interest: Interest accrues during the promotional period but isn't added to your balance until after the promotional period is over. If you haven’t paid off your entire balance by the end of the promotional period, you'll be charged all of the interest from day one of your loan. Even if your balance is $1 on the last day of the promotional period. You can avoid those interest charges by paying off the debt before the promotional period ends.