What is a balance transfer fee? Discover what you’ll have to pay when you consolidate your debt.
Balance transfers can be a useful way to consolidate your debt without the cost of high interest. While you’ll save on balance transfer rates, this doesn’t mean that balance transfers are cost-free. As well as the standard card fees, you might also have to pay a one-off balance transfer fee. Here we explain what this fee is and how you can confirm what you’ll have to pay when you transfer your balance.
What is the balance transfer fee?
A balance transfer fee is charged when transferring your existing credit card debt to a new credit card. It is usually 1-3% of the entire balance transfer amount.
When you conduct a balance transfer, you may be asked to pay a one-time balance transfer fee. It’s generally 1% to 3% of the total balance being transferred. Sometimes, this fee is capped and you’ll be required to pay the larger of the two. Usually, a balance transfer fee will be capped between $25 and $100. So if the fee had been capped at $75 and the balance transfer fee was 2%, then the 2% would be applied to any balance up to, say, $4,250. After this amount, you’d be required to pay the $75.
If you’re wondering if your card will charge a balance transfer fee, check the relevant product disclosure statement (PDS) and you should be able to locate your answer under the ‘fees and rates’ section. If you’re still unsure, contact the provider’s customer service team to confirm what you’ll be expected to pay.