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How To Negotiate A Balance Transfer Fee?

A balance transfer is a great solution to decrease credit card interest rate. We've summarized the most important steps for success in the negotiation

You can trust the integrity of our unbiased, independent editorial staff. We may, however, receive compensation from the issuers of some products mentioned in this article. Our opinions are our own.

Table Of Content

What is Balance Transfer?

For many people credit cards provide a convenient way to make purchases, but for others their card is necessary to make ends meet. This can mean carrying credit card debt. There is over $800 billion in credit card debt in the US.

In this chart using data from Urban Institute, you can see that the age group 43 to 47 carries the highest average credit card debt. This age group has almost double the credit card debt of their under 32 year old counterparts or seniors aged 68+.

Average Credit Card Debt by Age

Transferring your debt from one credit card to another is how balance transfers operate. The mechanism you use to do this is a balance transfer credit card; the balance of your old card is paid off by your new card, thus shifting who you have to repay.

You might be wondering how balance transfer cards create money for banks and other suppliers. To begin with, if you do not pay off your loan before the end of the 0% term, you will have to begin paying interest. Second, you'll almost always have to pay a fee to transfer your amount.

If you owe money on a credit card and the interest rate is typically 15 percent, it might be difficult to keep up with payments. If you transfer this balance to a 0% credit card, you won't have to pay interest until the promotional period ends, which may be up to three years.

In other words, a balance transfer is similar to an interest-free loan if you pay off the card before the 0% offer expires. What Types of People Should Use a Balance Transfer?

Who Should Consider It?

You might want to consider a balance transfer if you're already paying high interest rates on your credit cards. It can transfer your debt from a card with a high interest rate to one with a low or free interest rate (at least for a period of time).

If you have a lot of different credit cards with balances on them and all of them have high interest rates, you might want to look into that as well. Especially if you're having trouble keeping track of everything and making all of your monthly payments.

If you can consolidate everything onto a single card, it may make a significant difference in your capacity to make the payments you need to make. Additionally, for those who just do not want to deal with the trouble of making many payments in a single month, this method will consolidate your debt at the same time.

As a result, you won't have to keep track of all those numerous payment dates.

Negotiating Your Transfer Fee

However, there is a price to pay – transfer fees.

Even though balance transfer fees are paid only once (when the new card is issued), they could be hefty. Sometimes they are so high that the new interest rate does not justify the transfer. More of your payment will go toward reducing your credit card balance instead of towards paying interest

This is a short guide on how to negotiate a low balance transfer fee.

  • Compare Fees

This will be your first homework – comparison. Before you start negotiating, you need to be well prepared and of course, well informed. Research the industry; check out other banks and lenders and the conditions they offer. Competition is fierce, therefore you might find someone who offers much lower rates than your current ones. Use that information to press your bank when negotiating.

Be on the lookout for future promotions. If the rate is really good, one or two months of waiting are worth it. Sometimes credit card issuers can offer up to 18 interest -free months. Do not hesitate to change the credit card issuer if another one offers better terms.

  • Calculate Your Savings

After you have compared fees among credit card issuers and decided on the best offers out there, you have to sit down, take out the calculator and do the maths.

How much will you save?

Ok, the first thing to do is see how much you are eventually going to save if you make a balance transfer. When computing, use the annual percentage rate rather than the stated rate. The latter is the rate with which the bank attracts you, and the former is the actual amount of money you have to pay in interest.

Compare the result to your current credit card and find out how much you will save in the event of a balance transfer. Then see how much will the transfer fee cost. If there is a significant difference, then you might proceed with the next steps

Sometimes, people have several credit cards with different balances and at different rates, which makes it confusing to owners.

One of your cards is $5,000 at 8.5%,  another one is $1,500 at 11% and a third one is #3,500 at 10.25%. Don't despair, often lenders might fix your transfer with a single fee, which is usually between 2-3% of the balance amount.

  • Knowledge Is Power

Whoever said that knowledge is power was right. Think that way – a balance transfer means a new contract with the issuer of the credit card. Contracts must be read carefully before signed, especially the fine print.

Some of the very important things you have to be aware of are:

  • The spread between the old and the new interest rate
  • Is there any grace period and how long
  • Is there a universal default option

Also, you should carefully do the maths – is the balance worth the efforts, time and money spent on fees? If the balance fee is very high and the interest rate (when you calculate it!) cannot make up for the difference, is it worth it? How does this benefit you? How long are you going to repay the debt?

How to Negotiate?

Let's assume that you have done extensive research and found out the best offers on the market. Also, you have calculated that you would definitely benefit from the balance transfer in the long run. The next step is to go to your future (or current) lender and negotiate the terms of the balance transfer and the fee.

If you are a diligent payer and have been a client for a long time, mention your loyalty and also solid payment history. This is always very important when determining the new terms.

In case you are a business owner and have used the bank for many years, mention all the business transactions and processes you have made. You know that banks charge all of them, so they will benefit from you in the future.

Maybe you have had a card in the past but no longer have. Surely, the bank will try to attract you and “sell” you one of their credit card promotions. Even if they charge you 2%, they will make something out of you as a client. They always make a profit in the end. The point is to take advantage of the situation and get the best terms and conditions and a fee waiver.

Make a list of all the things you would like to achieve – and make sure you get it.

  • Waive The Balance Transfer Fee

The next step you have to do is try to make your bank waive the balance transfer fee.

Again, use your payment history and all the transactions you have made. Another thing you can experiment with is your credit score. Тhere is no bank that will neglect a stellar credit score and this could be one of the aces up your sleeve. Not only will the bank waive your fee but also give a good interest rate on the new card if you have a good credit score.

Don't forget: Sometimes banks are not willing to give you the terms you expect. Tease them and tell them that this or that bank offers you these conditions.

Occasionally, banks do not accept to waive the transfer fee. If this is the scenario, you can try to negotiate a lower fee – 100$, for example. Keep in mind that balance transfer fee can be up to 3% of the balance.

  • Patience is The Key

You have to understand that patience is really important in the process of negotiating.

Maybe the person you talk to is not very experienced; you have to right to talk to a manager or a supervisor. When we talk about banks and offers, nothing is fixed. You can discuss and try to change all the conditions in your favor. Even if you fail to waive your balance transfer fee, you might end up getting some great conditions.

How to Choose a Balance Transfer Card

Besides the fee, make sure you compare credit cards before transferring a balance or even applying for a balance transfer credit card:

  • How long does the introductory period last? – You'll want to make sure you know how long you have to take advantage of the 0% interest rate. After all, it'll only provide you a certain length of time (usually 12 to 18 months). You'll have to pay interest once you reach that point, so make sure you pick the longest duration possible. It will assist you in making payments without having to spend all of your money on interest and not actually paying off the debt.
  • Credit Limit – When it comes to your credit limit, you want to make sure you have some flexibility and freedom, but don't go too far. You'll also want to be sure you can condense everything you want to without running into any issues. You'll have a hard time getting what you want if you can't transfer all of the amounts, add fees and interest, and more. If you're just getting started with credit and aren't sure what you're doing, you might want to start with a card with a modest limit. These cards will assist you in getting started and better understanding the process of using credit cards. If you're the sort that easily falls into debt or isn't quite as responsible with money, this is a vital step to take that will make it simpler for you to remain out of trouble.
  • APR – When the promotional period ends, you'll be charged interest at the standard balance transfer rate (which is sometimes the same as the purchase rate). After the promotional time ends, you don't want to be stuck paying a high interest rate, especially if the promotional period isn't long enough for you to pay off the entire balance transfer. Many credit cards provide the same introductory rate for purchases and balance transfers, making the deal even more appealing. An introductory purchase rate, on the other hand, may work against you. You're working against any efforts to pay off the balance transfer if you're piling up charges on the card since there's a promotional rate.
  • Annual Fee – These are the annual fees that you are paid, and they essentially just allow you to have the card. If you use a balance transfer card, you are unlikely to be charged one of these fees.

Negotiate a Balance Transfer Fee - FAQs

You can actually check this for yourself using any number of free online balance transfer calculators. If you are considering a credit card balance transfer, your first step should be to calculate how long you need to repay the debt.

Balance transfer calculators will determine when your debt is paid off based on the information you enter. You can usually enter up to five current credit cards, including your new card details. The calculator does the rest.

The balance transfer fee gets charged any time you transfer debt between credit cards. It is usually between 3% and 5% of your total transfer and usually has a small fee (usually between $5 and $10).

You get charged this fee by the card company that issued you the card where you transferred the debt. A balance transfer can help you take advantage of lower interest rates, a move that can save you interest charges.

No, you are charged a specific percentage (card-dependent) any time you opt to transfer funds from one card to another. So, for example, if you transfer $100 from one card to another every month, you can expect to be charged anywhere from 3% to 5%.

If you require frequent balance transfers, you should look for card companies that have the lowest transfer fees available in order to minimize the impact of fees.

Credit card balance transfers usually take between 5 and 7 days. However, some major card issuers require customers to allow anywhere from 14 to 21 days to complete the balance transfer transaction.

As such, if you are considering getting a new balance transfer credit card and want to make sure you know how long the transfer will take, be sure to carefully read through the card’s requirements before signing up.