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Choosing the best balance transfer credit card

Read The Fine Print On Even The Best Balance Transfer Credit Cards

by / 0 Comments / May 02, 2015

The best balance transfer credit card has no fees, but they are rare. The perfect trifecta for a balance transfer credit card would be 0 percent interest for 18 months, no balance transfer fee, and no annual fee. While you’re looking for that elusive deal, let’s talk about the real world and what you can actually expect to find, specifically in the way of balance transfer fees.

What is a Credit Card Balance Transfer Fee?

This fee is charged by a credit company when they transfer a balance from one of your accounts to another. It usually ranges from 1 percent to 5 percent of the balance amount, or it could be a flat fee, or a combination of a percentage and a flat fee. The fee might have a cap or maximum amount charged, but that’s kind of gone out of vogue. Usually these fees don’t have caps, though the best balance transfer credit card will.

The fee disclosures aren’t found in bold print on the marketing materials. You’re more likely to read them in the fine print in the bottom section of the Schumer Box.

In her book, Confessions of a Credit Junkie, Beverly Harzog says, “Under ‘Transaction Fees,’ the balance transfer fee is usually listed first. Typically, you’ll see something like this: ‘Either $5 or three percent of the amount of each transfer, whichever is greater.”

Harzog explains further, “For the fee to be $5, you’d have to be transferring only $166.50 (166.50 x .03 = $4.995).”

Now who is going to go to the trouble of just transferring $166.50? Everyone has better things to do and one of those can be trying to get the fee lowered.

Asking for a Better Deal: The Best Balance Transfer Credit Card

It is sometimes possible to negotiate better terms with the best balance transfer credit card. Before making the negotiation call, do some research. Read the fine print including balance transfer options on the credit cards you currently hold. Then look at what’s available as far as other balance transfer cards and their associated fees.

Then, call the credit card companies you currently do business with and ask what they can do for you in the way of a balance transfer. Mention that you’ve made your payments on time and that you’ve been their loyal customer for eons. Ask if they can waive the balance transfer fee altogether. Why not start big? You never know what might happen. You may have to negotiate a decreased percentage instead. Next, call the new credit card companies you researched and ask the same questions.

Calculating the Value of a Balance Transfer

It makes sense to sign up for a balance transfer card if your goal is to quickly pay down your debt. But that nasty balance transfer fee can make achieving your goal a little more difficult.

According to the Federal Reserve and government data, the average household currently has a credit card debt of $7,221. For the sake of easy math, let’s round that down to $7,000. If you’ve found a balance transfer credit card with a fee of 3 percent you’ll pay an added $210, 4 percent requires an extra $280, and 5 percent means you have to fork over another $350. Only you can decide if that extra expense is worth it.

All of the above assumes that you’re only going to transfer a balance and pay it off. It doesn’t take into consideration that you might make new purchases, get a cash advance, or write one of those credit card checks. It’s wise to try to get out of credit card debt first, before stepping into the quicksand of more debt.

About the Author

Heather Larson writes about personal finance from her office in Tacoma, Washington. Her expertise in low-interest credit cards was developed out of necessity – as a writer with an erratic income. She has written about credit cards for Creditcards.com, Bankrate.com, Cardratings.com, and Quinstreet.com

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