What is a balance transfer fee?
It might be handy to know what a 0% balance transfer card is before explaining the transfer fee. A 0% balance transfer card allows you to transfer balances from your other credit cards to the new card, and pay 0% interest on those transferred balances for a specified period of time. Many credit companies charge a fee for this transfer, and that fee is called the balance transfer fee. The norm is a fee of around 3% to as much as 5%, but it can be even higher so it’s worth checking the fine print to ensure that you’re willing to take on that fee.
How do we determine which cards are the best?
At MyWalletHero, we understand that your reason for searching for that 0% balance transfer fee might not be the same as for the next person. For this reason, we use a number of factors to determine our ratings, so that they will be helpful to as many readers as possible. Of course, everyone’s individual circumstances are different, so in addition to our ratings, you should consider a credit card’s features yourself to confirm that it meets your needs. In some cases, a card we rate well may simply not fit your needs, while a card that we give a lower score may actually be a better match for you.
Here are the factors you should consider for these no-fee balance transfer cards:
- The introductory 0% term – When you opt for a 0% balance transfer card that happens to not charge that balance transfer fee, it usually means that you’re sacrificing the longer 0% terms. When comparing the best no-fee balance transfer cards on the market, you need to make sure that the introductory 0% period is long enough to fit your needs. It’s important to compare the actual cost of the balance transfer fee compared to the potential cost of paying interest on the balance if you’re unable to pay it down in that specified period if the term offered is too short.
- Interest rates – Your representative APR is the rate that will kick in once the introductory rate expires. On 0% balance transfer cards, there’s no APR on that balance that’s transferred, however, there could be an applicable APR on new purchases. Some credit cards also feature a 0% APR on new purchases for a period of time, but usually not as long as with the 0% balance transfer. For instance, a credit card company might offer 0% balance transfer for 24 months, along with 0% APR on new purchases for six months. After the six-month period, an APR of 21% applies to new purchases and will also be the rate once the 24-month balance transfer period ends. It’s important to take note of this rate and make sure it’s competitive with other offers you’re considering.
- Other card benefits – If you’re a frequent traveller, things that might stand out for you are perks such as airport lounge access and flyer perks. Other perks that might appeal to some consumers include retailer loyalty points, cashback, and more. These are not a primary consideration when choosing among no-fee balance transfer cards, but they’re well worth considering when comparing a card that has extra perks to one that doesn’t.
- That standout feature that’s hard to beat – Some cards offer that one perk that makes it hard to beat, such as no interest on money transfers or no annual fee. This feature might be the deciding factor in your card application journey and the 0% balance transfer or no balance transfer fees are just a bonus. This standout feature will likely depend on your personal circumstances, so consider what’s really important to you.
Why a full comparison of these cards are critical before the decision-making happens
We get it, you want to pick a card, and move on. There are young children to be chased, meals to be cooked, football to be watched, and holidays to be planned. Fun stuff. But it’s important to take some time to consider your choices before moving forward with any card.
Here’s why:
- You might end up paying more than you anticipated – While there are definite savings when you apply for a 0% balance transfer card that also happens to have no transfer fee, it’s important to check the other fees before making a decision. Fees such as money transfer fees, annual card fees, and foreign exchange fees can quickly add up if you’re not expecting them. It’s also important to choose a card that you’ll be able to comfortably manage once that APR kicks in, especially if you’re unable to pay off the entire balance.
- Complying with those terms and conditions – The one thing that could derail the benefits of these cards is not understanding the terms and conditions of the offer. For instance, many of these cards require you to transfer your balance within a specified time period, usually 90 days. It’s also important to meet the general terms and conditions of the card to ensure the benefits apply, such as keeping up with the payments and paying the card on time. If you don’t, you might not only incur fees, but you may lose your 0% introductory period.
- Choosing a specific credit card company might offer other benefits – Some credit card companies might have special partnerships with other companies that could result in additional benefits. For instance, some banks offer their existing clients access to specific cards that might not be available to non-clients. It also helps to see whether offers with partners might grant cardholders access to services and products that would be to their benefit. This will depend on your habits and circumstances, so consider things like where you bank, where you commonly shop, and what airlines you like to fly.
- Understand your maximum limits – One other detail to consider when applying for a credit card is whether the maximum credit limit will be enough. This is because there might be a cap on the balance you can transfer. Some cards limit the balance transfer amount to around 95% of the card limit. So you’ll want to make sure that the credit limit is high enough that you’ll be able to transfer your balances in full.
Making the most of your 0% balance transfer credit card
It’s important to make the most of the balance transfer period, as this can allow you to save quite a large portion of interest. It could also help you get out of debt, without the burden of an interest rate for that introductory period. But in order to make the most of this kind of card, there are two critical things that you need to keep in mind.
First, think through how much time you’ll need to pay down your balances. Be conservative when doing this, as you want to leave yourself some breathing room for life’s inevitable ‘surprises’. The aim here is to avoid having a balance left on your card when the 0% introductory period is over, since at that point you’d have to pay the card’s standard interest rate on your remaining debt.
Second, you need to pay close attention to the window for making your transfers. In many cases, there’s a certain window for taking advantage of the no-fee transfers, so you’ll need to attend to that if you want to avoid paying a balance transfer fee. But even more important, often there is a limited window in which to make your 0% balance transfer at all. If you don’t make your transfers within that window, you don’t get the 0% rate on your transferred balances. And bear in mind, that the ticking clock on that window usually starts as soon as you are approved, not when you actually receive your card.
Is the 0% balance transfer fee the most important thing to look out for?
This may seem obvious, but it bears mentioning. If you have outstanding credit card balances to transfer, a no-fee balance transfer card can be a great choice. But if you don’t have outstanding balances, or your balances are low enough that you can reasonably pay them down in a very short period of time, the 0% balance transfer feature — fee or not — may not make sense for you.
In that case, you may want to consider a card that offers other benefits that may be better suited to your needs. Look out for cards that partner with brands that you support, or offer cashback, or allow you to make use of unique services and products instead. Again, the 0% period and no transfer fee is only a benefit to you if there’s a balance to transfer.
Is a 0% balance transfer card with no fee right for you?
A credit card with a 0% balance transfer fee and no fee on the transfer? What’s not to like? I hope I’ve made clear here that the answer to that lies in your own financial situation. Sure, a no-fee balance transfer card can be great. But it has to fit your needs.
The ideal scenario for a no-transfer-fee card, is someone that has an amount of outstanding credit card debt that they can pay off in a short- to medium-term timeframe. That is, if you think you could pay down your debt in the course of a year or less, than you may be a good candidate for a card that’ll give you 0% interest on your transferred debt and charge you no fee to bring that balance over to the new card.
However, if your debt is enough that you’re not sure you can pay it off in a shorter timeframe, then a no-fee balance transfer card may not be the best bet. Cards that don’t carry a balance transfer fee don’t have the longest 0% periods on the market, and if you anticipate needing a long time to pay down your debt, going for a card with a shorter 0% term may mean you get caught paying the standard APR, and that can eat up any balance transfer fee savings very quickly. When you’re ready to see how much you can save, check out our new balance transfer calculator.
Similarly, if you don’t have much (or any!) credit card debt, then there’s really no reason to bother with a balance transfer card. Instead, you can look for cards that’ll reward you with points or cashback, or go for a card with a 0% purchases period if you have a big purchase coming up that you’d like to pay down over time.
