Interest fee

Is the balance transfer fee worth it?

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A balance transfer credit card is a great way to refinance existing credit card debt, especially since credit card interest rates can reach 30%. By transferring your balance to a card with a 0% introductory APR, you can quickly dodge rising interest charges and give yourself repayment flexibility.

However, there are usually fees to complete a balance transfer, and they are usually 3%. But is it worth paying?

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

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Is the 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 offers an introductory APR offer of 0%, but only if you are still need time to settle a balance. The other option of paying high interest rates on your current card is not a financially wise decision.

However, if you can pay off your balance immediately and in full on your current card, that’s more ideal. You’ll save on new interest charges as well as balance transfer fees.

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

crush numbers

If you have the following balances, here’s 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 hit bigger numbers, you may want to consider a different financial product to refinance your credit card debt, such as a personal loan or personal line of credit. Additionally, a large balance on a balance transfer credit card could negatively impact your credit score.

But let’s say you had a balance of $2,000 on a credit card like the Chase Sapphire Preferred® card. The interest rate on the card ranges from 15.99% to 22.99%, depending on creditworthiness with $5 or $5.% the transfer amount, whichever is greater. Even at the low end and paying $100 a month, it will cost you an additional $338 in interest to pay off over 23 months. That’s way more than a $60 fee for a 3% balance transfer.

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

This shows how quickly credit card debt can pile up, and paying a small fee can quickly dodge a bullet and give you more repayment flexibility.

Note that some credit cards charge a 5% balance transfer fee, so be sure to read the fine print before making a transfer. A 5% balance transfer fee will alter the above calculations, but may still be worth it.

How to Choose a Balance Transfer Credit Card

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

  • Duration of the introductory offer: How long do you think it will take to fully pay off your balance? Based on this, you will be able to find a card that offers a 0% introductory APR on balance transfers that works for you. For example, if you expect to be able to pay your balance in full in less than 18 months, the Citi® Double Cash Card offers an introductory APR of 0% for balance transfers during the first 18 months of card membership (13 .99% – 23.99% variable after this). 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 perks like cash back on purchases and travel insurance.

Best credit cards with balance transfer

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

U.S. Bank Visa® Platinum Card

On the secure site of US Bank

  • Awards

  • welcome bonus

  • Annual subscription

  • Introduction AVR

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

  • Regular APR

    14.49% – 24.49% (variable)*

  • Balance Transfer Fee

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

  • Foreign transaction fees

  • Credit needed

Advantages

  • 20 interest-free billing cycles on balance transfers and purchases
  • No annual fee
  • Cell Phone Protection Plan

The inconvenients

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

Citi® Dual Charge Card

  • Awards

    2% Cash Back: 1% on all qualifying purchases and an additional 1% after you pay your credit card bill

  • welcome bonus

  • Annual subscription

  • Introduction AVR

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

  • Regular APR

    13.99% – 23.99% variable on purchases and balance transfers

  • Balance Transfer Fee

    For balance transfers made within 4 months of account opening, an initial 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 fees

  • Credit needed

Advantages

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

The inconvenients

  • No welcome bonus, so you can’t maximize rewards for the first few months of opening the card
  • Minimum cashback refund of $25
  • 3% fee charged on purchases made outside the United States
  • Estimated rewards earned after 1 year: $443
  • Estimated awards earned after 5 years: $2,213

Wells Fargo Active Cash℠ Card

On the Wells Fargo secure site

  • Awards

    Unlimited cash rewards of 2% on purchases

  • welcome bonus

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

  • Annual subscription

  • Introduction AVR

    0% APR on eligible purchases and balance transfers for the first 15 months from account opening

  • Regular APR

    14.99% to 24.99% Variable APR on purchases and balance transfers

  • Balance Transfer Fee

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

  • Foreign transaction fees

  • Credit needed

Advantages

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

The inconvenients

  • 3% fees levied on foreign transactions

At the end of the 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 this, credit card debt can be very difficult to pay off. One way to avoid spiraling credit card debt is to make a balance transfer to a card with a 0% APR introductory offer, but that’s not a sustainable practice.

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

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.