Transferring credit card balances to a card with a lower annual percentage rate can be a money-saving move if it means paying less interest on the debt.
There’s just one thing to watch out for: balance transfer fees.
These fees can add to the total amount you have to repay. Your credit card company may allow you to negotiate a lower fee, but it’s not always easy. These tips can help you get the best deal possible when it comes to balance transfer fees.
Calculate potential balance transfer fee savings
Balance transfer fees are just one way that credit card companies make money, so it’s not necessarily in their best interest to waive those fees for customers.
“Although cardholders are rarely successful at negotiating a lower balance transfer fee or getting it waived entirely, it is possible and some cardholders have reported success,” says Megan Horner, credit card expert at Finder.com.
Credit card companies typically charge 3% to 5% of the amount being transferred, with a flat dollar amount minimum. For example, you might pay 3% or $10, whichever is greater.
Before approaching your credit card company about waiving or reducing the fee, calculate how much you’d pay with the standard fee. For example, on a $5,000 balance, a 3% transfer fee would net the credit card company $150.
Having a specific number in mind can help you decide if trying to negotiate is worth your time. There’s a big difference, for instance, between a $25 fee and a $250 fee. Also, be clear on your goals for transferring a balance.
For example, say that Card A offers a 0% APR for nine months with no balance transfer fee. Card B offers a 0% APR for 18 months, with a 3% balance transfer fee.
Card A would make negotiating unnecessary. If you need the longest amount of time possible to pay off a balance transfer, Card B might be the better fit. But with Card B, you’re taking a gamble on whether the credit card company will cut you a break on the balance transfer fee…Read more>>