Are balance transfer fees on the rise again?

Friday, October 8th, 2010
Updated: October 8th, 2010
The content is accurate at the time of publication and is subject to change.

Banks are scrambling to find ways and means to recover from the losses incurred due to loans as well regulatory laws.  However, they are not going back on the promised rewards and introductory period; they are instead tampering with the fine print which goes unnoticed by cardholders most of the time.  One such instance was the hike in balance transfer fee.

Balance transfer fee, is the fee charged for moving from one card to another or consolidating balances onto one card for the sake of convenience.  Most often, people are under the impression that they get to save a lot of money by moving from cards with a higher interest rate to cards with lower interest rates. But that may not be the case always, as the new card will also charge a percentage of the balance that is transferred. For instance, for transferring a balance of around $10,000, one would end up paying $300 as transfer fee (charged at 3%).

Some of the biggest offenders in the last few months have been First National and the Commerce Bank which charge 5% on all their cards, while the others charge different rates on different card offers. 

Some are listed below:

Chase – charges 5% on and Freedom – 3% on all the other credit cards.

Discover – charges 5% or more with introductory APR of 0% for the first 18 months – charges 3% on all others.

Bank of America – charges 4% on most cards

Citibank – charges the highest on store cards – charges 3% on all other cards.

Fidelity, Fifth Third and Barclays charge 4% on their cards.

The ones who haven`t joined the bandwagon as yet is Capital One.  CapOne does not charge any foreign transaction fees.  CapOne`s reward cards such as Venture are also not charged balance transfer fees. AmEx has no balance transfer fee on the Clear Card.  Other than these NavyFed and cards by credit unions charge no transfer fee at all.  A large number of civilian credit unions and military do not charge a transfer fee as well.

While the issuers keep the introductory rates on the lower side, they have hiked up the fees in the fine print.  This goes unnoticed and they can carry on luring away clients from the other competitors. 

Although working out the math might get a little cumbersome one can get a good deal and save on interest big time.  The best option right now is the Diamond Preferred cards or the Citibank Platinum Select cards which offer 0% with a grace period of 21 months, where the transfer fee is only 3%.  This surely will emerge as a clear winner irrespective of the math.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

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