Consolidate your debts without paying interest and any extra fees with a no balance transfer fee credit card.
If you’re struggling with credit card debt, a balance transfer could help you achieve financial freedom sooner. By transferring existing debt onto a new 0% balance transfer card, you’ll enjoy an interest-free introductory period that will help you cut down costs and repay your debt faster. However, some cards do charge a one-off balance transfer fee when you move your debt. This guide explains what a balance transfer fee is and the cards you can use to avoid them.
Comparison of credit cards with no balance transfer fee
What is a balance transfer fee?
Some credit cards charge a one-time fee of between 1-3% of the amount you are transferring. This fee is more common among 0% balance transfer credit cards because it lets card providers recover lost profits made from low or no interest rates. Depending on the size of your balance transfer and the percentage charged, this fee can make your balance transfer less worthwhile. For example, if you’re moving a debt of $10,000 and the balance transfer fee is 3% of the total, your balance transfer fee would be $300. You can find out whether a card charges a balance transfer fee on our review pages or the relevant product disclosure statement.
How do no balance transfer fee credit cards work?
No balance transfer fee credit cards promise no extra fees when you move your balance across to the new account. However, despite waiving the balance transfer fee, some card providers might make up for it by charging higher interest rates or annual fees.
How to compare balance transfer credit cards with no fee
The following factors are important when considering a no fee balance transfer credit card:
- Balance transfer interest rate. When it comes to interest rates on your balance transfer, lower is obviously better and 0% is the ideal rate.
- Length of promotional period. The length of the introductory period directly factors into your interest savings: the longer the period, the more money you’ll save.
- Revert rate. This is the higher interest rate that you’ll pay once the promotional period ends. This is especially important if you have not paid your debt off in full by this time.
- Balance transfer limit. The amount you can transfer is limited by the card’s limit and the card’s policy on balance transfers. Your transfer may be limited to a percentage of your credit card limit (such as up to 90% of your credit limit).
- Eligible banks. There may be restrictions on which credit cards you can transfer your existing balance to. Usually you will not be allowed to balance transfer between accounts managed by the same card issuer. See the full list of who you can balance transfer to here.
- Interest rates. Consider the other interest rates that may apply, such as the rates for a cash advance or purchase.
- Fees. You should also factor in other possible fees including the card’s annual fee as well as cash advance, ATM and foreign transaction fees.
How to make the most of a no balance transfer fee credit card
Follow these tips to maximise the benefits of your new card:
- Plan your repayments. Do this at the outset and stick to it. By being disciplined and forming a well-considered debt reduction plan, you will get out of debt more quickly. The aim is to repay your entire balance before the introductory period ends.
- Pay more than the minimum amount. Many people make the mistake of reducing their monthly repayment amount and pocketing the extra cash they save during the 0% interest period. While you might find the extra cash flow helpful in the short term, this won't help you reduce your credit card debt in the long run.
- Be careful about making new purchases. If you’re planning to use your balance transfer credit card to make purchases, be aware that you may not be eligible for interest-free days on purchases while carrying a balance. The interest on your purchases could offset the interest savings from your balance transfer and grow your debt.
- Avoid incurring other fees. Other fees can quickly accumulate to erode your interest savings. For instance, getting cash from an ATM could incur a cash advance fee, an ATM fee and a cash advance interest rate that begins accruing from the date of that transaction.
Even with 0% interest on your balance transfer and no balance transfer fees, there is still no perfect credit card out there. The best you can do is thoroughly research all available options to find the one that will best match your needs.Back to top