How a Balance Transfer Could Help You Save Money, Even If You Have to Pay a Fee

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If you’ve ever struggled to pay off credit card debt, you know how fast those interest charges pile up.

When you carry a balance on your card and have to pay interest, you can end up paying much more than you initially charged. Americans paid $120 billion in credit card interest charges and fees per year from 2018-2020, about $1,000 per year for every American household.

If you’re looking for ways to pay off your debt faster and save money, a balance transfer credit card could come in handy. Deciding whether a balance transfer card makes sense depends on your balance, repayment strategy, and any fees and other terms of the card. 

You can see the value of a balance transfer fee by comparing it to your overall savings, says Bruce McClary, senior vice president of marketing and communications with the National Foundation for Credit Counseling. “To determine if a balance transfer is worth the cost, see if the amount you save over time is more significant than the projected balance transfer fee and the cost of leaving the balance on your current card,” he says.

Here’s what you should keep in mind when considering a balance transfer.

How Is a Balance Transfer Fee Calculated?

With a balance transfer, you can move the balance from one credit card to another. Balance transfer credit cards offer a low or 0% APR for a set promotional period such as 12-18 months, or even as long as 21 months. Once the promotional period ends, the regular purchase and balance transfer APR applies. 

While a balance transfer can give you some time to pay down your balance without added interest, you will likely see a balance transfer fee that is set by the credit card issuer. A balance transfer fee generally runs 3%-4%, but some cards charge as much as 5%. You’ll repay the new total balance through monthly installments, and if you don’t pay in full by the end of the promotional period, you’ll pay interest on the new, higher amount. 

To qualify for a balance transfer card, you usually need to have good to excellent credit. If your credit score is in the poor to fair range — meaning a score under 670 — you may not be eligible, according to credit reporting company Experian

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Wells Fargo Active Cash® Card

Wells Fargo Active Cash® Card

Editor’s Score: (4.6/5)
  • Introductory balance transfer rate:
    0% intro APR for 15 months from account opening on qualifying balance transfers
  • Annual fee:
    $0
  • Regular APR:
    15.74%, 20.74%, or 25.74% Variable APR
  • Recommended credit:
    670-850 (Good to Excellent)
  • Apply Now externa link icon At Wells Fargo’s secure site See Rates & Fees.
Learn More externa link icon
Citi Simplicity® Card

Citi Simplicity® Card

Editor’s Score: (4.0/5)
  • Introductory balance transfer rate:
    0% for 21 months on Balance Transfers
  • Annual fee:
    $0
  • Regular APR:
    15.49% – 25.49% (Variable)
  • Recommended credit:
    670-850 (Good to Excellent)
  • Learn more externa link icon At our partner’s secure site
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U.S. Bank Visa® Platinum Card

U.S. Bank Visa® Platinum Card

Editor’s Score: (4.1/5)
  • Introductory balance transfer rate:
    0% for 20 billing cycles on balance transfers
  • Annual fee:
    $0
  • Regular APR:
    15.24% – 25.24% (Variable)
  • Recommended credit:
    670-850 (Good to Excellent)
  • Learn more externa link icon At our partner’s secure site See Rates & Fees, Terms Apply.

Is It Worth It to Pay a Balance Transfer Fee?

Even when you account for a 3% or 5% fee, completing a balance transfer can be a good idea if you have high-interest credit card debt. 

When it comes to balance transfer credit cards, it can be hard to find cards that don’t charge balance transfer fees. The few cards that don’t charge the fee may have other drawbacks, such as a higher promotional APR or annual fees. And, those are usually issued by credit unions, where you need to be a qualifying member to get the card. 

When deciding whether a balance transfer is right for you, consider the following factors. 

Balance Transfer Fee

While a fee of 3% to 5% may not sound like a lot, when you actually think about that as a percentage of your balance, you can see how it adds up. 

Below is an example of what you’d pay in balance transfer fees when you transfer different amounts with fees of 3% and 5%. 

Amount of Transfer3% Balance Transfer Fee5% Balance Transfer Fee
$1,000$30$50
$2,000$60$100
$3,000$90$150
$4,000$120$200
$5,000$150$250

Annual Percentage Rate

A balance transfer can be a smart choice when you have debt with a high interest rate. The average annual percentage rate was 16.44% as of November 2021, which can quickly become a lot of money for you to owe. With an APR in the double digits, your minimum credit card payment won’t make much progress against your balance, and your debt can balloon out of control.

If you can qualify for a card that offers 0% APR for its introductory offer period, which is a popular offer, you’ll have several months to chip away at the balance without interest accruing. 

Promotional Period

The length of the promotional APR varies by card issuer. You can have anywhere from six to 21 months to repay your balance at the introductory APR; after that, the regular APR on purchases and balance transfers applies. 

“Make sure you are aware of how long the introductory rates will last and what you will need to pay each month in order to clear the balance before the clock runs out,” McClary advised.

If you have a large balance and will need time to pay it off, a card with a shorter promotional period may not be a cost-effective option since you may not have time to pay it off before the end of the offer period.

Repayment Strategy

The average balance transfer amount for individuals with good scores (660 to 719) was $4,300 in the fourth quarter of 2020. That is a relatively substantial amount of debt, so it’s essential to have a repayment strategy in place before utilizing a balance transfer. 

To get the most value out of a balance transfer credit card and balance transfer fee, you need to pay off the transferred amount by the end of the 0% promotional period and avoid racking up more debt. That means you need to pay more than the minimum. 

If you carry a balance after the introductory offer ends, you may negate the value of the balance transfer. Also keep in mind that late payments can cause you to lose the 0% offer, and regular purchase and balance transfer APR will apply right away. 

Potential Savings

Whether it’s worth it for you to do a balance transfer all comes down to how much you can save.

Look at your current credit card statement. It should tell you what your balance and minimum payment is, plus how long it will take and what you will pay in total if you only make the minimum payment on this amount.

It might not take much to make the balance transfer fee a good move for you, says Ann Martin, director of operations with CreditDonkey. “While I don’t recommend keeping a balance on a credit card, if you’re in a situation where most of the transferred balance is going to sit on the card for a while, it doesn’t take a very large interest rate difference to account for a 2% or 3% one-time fee,” she says. 

Compare the fee and your current rate to what you’d pay at 0% APR on a balance transfer card, and you can see how much you’d save and whether the balance transfer fee is justifiable. 

Pro Tip

To calculate whether a balance transfer fee is worth paying, you can calculate the total amount of debt you would owe, including the fee, APR, and potential interest if you go past the introduction period.

For example, Carl has $4,300 of credit card debt on a card with a 16.44% APR. Currently, his minimum payment is $107.50. If he keeps his current card and makes his minimum payments every month — and doesn’t use the card for any future charges — it will take him 59 months to pay off his debt. And, he’ll pay $1,973 in interest charges. 

But let’s say Carl took advantage of a balance transfer offer. He transferred his balance to a card that offered 0% for 21 months; after that, the APR was 15%. The card had a 3% balance transfer fee, so the transfer cost him $129. 

Even with that fee, a balance transfer would be worth it. Carl would pay off his debt in 45 months — over a year faster — and would pay just $439 in interest charges and balance transfer fees. By using a balance transfer, Carl would save over $1,500 in interest. 

If Carl increased his payments and paid off the balance by the end of the promotional period, the balance transfer fee would be an even better deal. To pay off the balance by the end of the promotional offer, Carl would have to pay $211 per month for 21 months. With that approach, he’d be out of debt about three years sooner, and he’d save over $1,800 in interest charges and fees. 

As you can see, paying a balance transfer fee for no interest can be a smart trade-off. 

Original CardBalance Transfer With Minimum PaymentsBalance Transfer With Increased Payments
Account Balance$4,300$4,300$4,300
Balance Transfer Fee (3.00%)N/A$129$129
Monthly Payment$107.50$107.50$211
Time to Repay59 months45 months21 months
Total Interest and Fees$1,973$439$129
Total Repaid$6,273$4,739$4,429
Total Savings$1,534$1,844

To decide if a balance transfer is right for you, you can use the National Foundation for Credit Counseling’s credit card payment calculator to see how much you’d pay in interest at your current rate and at 0% APR. 

What Are the Best Balance Transfer Cards?

Balance transfer offers were less common during the pandemic as credit card companies tried to limit their risk. In fact, balance transfer volume decreased 36% year over year to $35 billion in 2020. However, the cards are gradually becoming more prevalent as the economy stabilizes.

When thinking about which balance transfer card to choose, consider your credit, the promotional APR, the length of the introductory period, and balance transfer fees. Some top balance transfer credit cards to consider:

1. Wells Fargo Reflect

Wells Fargo Reflect℠ Card
Learn More externa link icon
Wells Fargo Reflect℠ Card
Editor’s Score: (4.2/5)
Apply Now externa link icon At Wells Fargo’s secure site. See Rates & Fees.
Wells Fargo Reflect℠ Card
Editor’s Score: (4.2/5)
  • Introductory balance transfer rate:
    0% intro APR for up to 21 months from account opening on qualifying balance transfers
  • Annual fee:
    $0
  • Regular APR:
    13.74% – 25.74% Variable APR
  • Recommended credit score:
    670-850 (Good to Excellent)

NextAdvisor’s Take

Pros
  • Long intro APR
  • No annual fee
  • Cell phone protection
Cons
  • No rewards
  • High APR after the introductory offer ends
  • Must meet requirements to get full 21 months of 0% intro APR
The Bottom Line
The no annual fee Wells Fargo Reflect Card offers an initial 0% intro APR on purchases and qualifying balance transfers for 18 months from account opening, with the potential for an intro APR extension of up to 3 months with on-time minimum payments during the introductory and extension periods. After that, there will be a variable APR of 13.74% to 25.74%. It’s light on added perks and has no rewards, but carries one of the longest 0% intro periods available today.

Additional Card Details

  • Get a 0% introductory APR for up to 21 months from account opening on purchases and qualifying balance transfers — start with a 0% intro APR for 18 months from account opening on purchases and qualifying balance transfers, then unlock up to three additional months with on-time minimum payments during the 18-month offer and the extension period, then a 13.74% to 25.74% variable APR thereafter
  • Cell phone protection worth up to $600 when you pay your bill with your eligible Wells Fargo card (subject to a $25 deductible)
  • Get access to My Wells Fargo Deals: earn cash back in the form of a statement credit when you use your eligible Wells Fargo card with select retailers
  • Roadside dispatch

With the Wells Fargo Reflect card, you can get 0% intro APR for 18 months on qualifying balance transfers. If you make all of your payments on time during the intro and extension periods, you may be eligible for a three-month extension, giving you a total of 21 months at 0% intro APR. After that, a variable APR of 13.74% to 25.74% applies. 

The card offers an introductory balance transfer fee on transfers completed within the first 120 days of opening an account. The fee is just $5 or 3% of the amount transferred, whichever is greater. After the 120-day mark, the fee is up to 5% or $5, whichever is greater.

2. Citi Simplicity

Citi Simplicity® Card
Learn More externa link icon
Citi Simplicity® Card
Editor’s Score: (4.0/5)
Learn more externa link icon At our partner’s secure site.
Citi Simplicity® Card
Editor’s Score: (4.0/5)
  • Introductory balance transfer rate:
    0% for 21 months on Balance Transfers
  • Annual fee:
    $0
  • Regular APR:
    15.49% – 25.49% (Variable)
  • Recommended credit score:
    670-850 (Good to Excellent)

NextAdvisor’s Take

Pros
  • 0% Intro APR for 21 months for balance transfers and 12 months for purchases (then variable APR 15.49% to 25.49%)
  • No annual fee
  • No late payment fees or penalty APR
Cons
  • No rewards
  • No welcome offer
  • 5% balance transfer fee ($5 minimum)
The Bottom Line
The Citi Simplicity Card has one of the longest 0% introductory periods available for balance transfers, at 21 months from the date of your first transfer. For purchases, cardholders can benefit from 12 months of 0% interest, making this a great card option for consolidating debt or financing planned major expenses (15.49% – 25.49% variable APR thereafter).

Additional Card Details

  • Balance transfers must be completed within 4 months of account opening
  • Includes Citi Identity Theft Solutions protection
  • Choose your payment due date
  • Digital wallet compatible

The Citi Simplicity card has one of the longest promotional APR offers on the market. Eligible credit card applicants can get up to 21 months at 0% APR on balance transfers, but balance transfers must be completed within the first four months of opening your account to qualify. At the end of the introductory period, the regular variable APR will be between 15.49% and 25.49%, depending on your creditworthiness. 

The Citi Simplicity card’s balance transfer fee is $5 or 5% of the amount transferred, whichever is greater.

3. U.S. Bank Visa Platinum

U.S. Bank Visa® Platinum Card
Learn More externa link icon
U.S. Bank Visa® Platinum Card
Editor’s Score: (4.1/5)
Learn more externa link icon At our partner’s secure site. See Rates & Fees, Terms Apply.
U.S. Bank Visa® Platinum Card
Editor’s Score: (4.1/5)
  • Introductory balance transfer rate:
    0% for 20 billing cycles on balance transfers
  • Annual fee:
    $0
  • Regular APR:
    15.24% – 25.24% (Variable)
  • Recommended credit score:
    670-850 (Good to Excellent)

NextAdvisor’s Take

Pros
  • Long 0% interest intro offer for purchases and balance transfers
  • No annual fee
  • No penalty APR
Cons
  • Fees for late or returned payment
  • 3% balance transfer fee ($5 minimum) applies
  • No rewards structure
The Bottom Line
U.S. Bank Visa Platinum is a solid option for a 0% interest intro offer on new purchases as well as balance transfers, and it’s easy to see why: its 20-billing-cycle intro period (15.24% – 25.24% variable APR thereafter) is among the longest available. You won’t earn any ongoing rewards, but for debt payoff or forgoing interest on new purchases, this card is a great choice.

Additional Card Details

  • 0% introductory APR for 20 billing cycles on new purchases
  • 0% introductory APR for 20 billing cycles on balance transfers posted to your account within 60 days of account opening
  • Balance transfer fee of $5 or 3% of balance, whichever is greater
  • No penalty APR
  • Cellphone protection for damage or theft up to $600 for up to two claims per year with a $25 deductible.

The U.S. Bank Visa Platinum card gives cardholders 0% APR for 20 billing cycles. After that, you’ll see a variable APR of 15.24% – 25.24%. The balance transfer fee is $5 or 3% of the amount. 

Keep in mind that balance transfers don’t solve the root cause of the problem, so think about how you got into debt in the first place and how to avoid repeating those mistakes. 

“Balance transfers can often give someone a false sense of financial security,” said Martin. “Because a balance transfer can help avoid a credit limit or reduce monthly debt payments, there is a sense of progress on debt when they haven’t actually reduced the amount they owe.”

To address the root causes of your debt, consider meeting with a counselor from a nonprofit credit counseling agency. They can help you design a budget, negotiate with your creditors, and develop a repayment plan.