What is a balance transfer fee?
A balance transfer fee is the one-time charge you might pay when you move your debt to a new credit card. Here's how to decide if it's worth paying and how to avoid it.
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Balance transfers are a useful way to consolidate your existing debt without the high interest cost. You'll save on interest with low balance transfer interest rates, but it doesn't mean that balance transfers are cost-free. Depending on the offer, you might have to pay a one-off balance transfer fee. This is usually 1% - 3% of the money you move and can eat into your savings. Here's how to decide if it's worth paying it and cards that don't charge this fee.
What is a balance transfer fee?
A balance transfer fee is a percentage-based fee charged when you transfer your existing credit card, store card, or personal loan debt onto a new balance transfer credit card. The balance transfer fee is usually 1-3% of the entire balance transfer amount.
For example, if you are transferring $5,000 onto a new card and are charged a 2.5% balance transfer fee, the entire amount of the debt that will appear on the new card is $5,125 (the $5,000 existing debt and the $125 balance transfer fee). Unlike an annual fee, this fee is only charged once when you first move your balance.
Do I have to pay a balance transfer fee?
Not all balance transfer offers charge a balance transfer fee, so it's definitely something to pay attention to when you're comparing your card options. That said, just because you might have to pay a balance transfer fee, doesn't mean that offer won't save you the most money. If you're totally against paying this additional charge, we've found cards with 0% balance transfer fees for you to compare.
Credit cards without a balance transfer fee
When comparing card options, a good place to start is the 'Amount saved' column. This will show you which offer could save you the most money if you pay it off over the term of the balance transfer.
Are you aware of any credit cards in the Australian market that currently charge a balance transfer fee? I’ve shopped around and I can’t find any at present…
Hi Ricky
The HSBC Credit Card currently charges a 2% balance transfer fee.
Cheers
Jeremy