Balance transfer là gì

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A balance transfer is a great way to cut costs on existing debt. However, many credit cards charge a fee on the transfer which can lead to unexpected costs if you’re not careful. Here’s what a balance transfer fee is and how it works.

A balance transfer fee is the amount your lender charges when you balance-transfer an eligible debt onto a new credit card. The balance transfer fee is usually 3% to 5% of the entire balance transfer amount. This fee is represented on the balance of the credit card receiving the balance transfer.

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, which is 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.

It depends. If you’re transferring a high amount to a credit card with a 0% intro APR for 12 months, you’ll likely pay less in transfer fees than you would in interest.

You may also find a stellar card that doesn’t charge a balance transfer fee and offers a low APR of 10% or less. Depending on your repayment timeline, this situation can save you hundreds of dollars.

However, no-fee balance transfer cards often come with short 0% intro APR periods — or none at all. If you don’t pay off your balance by the time the promotion expires, your remaining debt might be assessed at a higher interest rate. With no 0% intro period, you’ll start paying interest on balance transfers immediately. You’ll want to calculate your repayment period before settling on a balance transfer card.

If you’re curious how to calculate the potential costs of a balance transfer, we’ll help you break down the logistics.

For a balance transfer, you’ll typically be charged 3% to 5% of the total balance transferred. Usually, this fee has a flat minimum amount. It’s usually written as “$10 or 3%” on the card rates and fees, and you’ll need to pay the greater of these two numbers. If 3% of the amount you’re transferring is less than $5, then you’ll be charged $5. Here are a few examples:

If you’re wondering what fee you’ll be charged to transfer a balance, check the terms and conditions of the card. You should be able to find your answer under the fees and rates section.

If you’re still unsure, contact the provider’s customer service team to confirm what you’re expected to pay. You may find out that you don’t have to pay one at all.

Also, calculate what you’d save with variousbalance transfer fees using our calculator.

You’ll pay anywhere from nothing to hundreds of dollars on a balance transfer. How much you pay comes down to the amount of debt you’re transferring the credit card receiving the transfer, and how soon you can pay off the balance.

If you want to get an idea of how much you’ll pay on a balance transfer, use our balance transfer calculator below.

To use this calculator:

1. Fill out the amounts and APRs of the cards you’re transferring from.
2. Use our default values or fill out a card you’re considering transferring your balance to.
3. Choose Calculate and find out what you could save.

This actually depends on the card. Most credit cards will charge either 3% or 5% fee of the amount for a balance transfer. But some credit cards have no balance transfer fees. These are often cards issued by credit unions, although there are some cards issued by banks.

However, there’s a trade-off to having $0 balance transfer fees. Typically cards that come with no balance transfer fees have a shorter 0% intro APR period on balance transfers than the cards with balance transfer fees. Make sure you do the math and choose the option that will save you more money.

If you’re committed to getting out from under your debt, finding a balance transfer card can help. Evaluate your needs, the fees and APR of your new card and what will save you the most money in the long run.

No-fee cards with low APRs can help, but make sure you compare your balance transfer options before you decide on a new balance transfer credit card.

Do you still have to make payments on a no-fee balance transfer card with a 0% intro AP
Yes. Although your balance won’t accrue interest during the promotional APR period, you’ll still need to pay at least the minimum payment each month.

How do I transfer more than once?
It depends. In some cases, you may not receive the low introductory rate.

The reason is that transfer promotions usually have set rules defining when and how often transfers can occur. This is set-in-stone information.

In the rare case that you pay off a transfer balance and years later find yourself in a similar situation, you might be able to qualify for another balance transfer with a different provider.

You may also transfer balances to your new card after the intro period has ended, but you’ll pay a balance transfer fee. And you may not get the introductory balance transfer rate — instead, you’ll be charged the purchase rate APR.

What’s the limit to how much I can transfer through a balance transfer offer?
This varies from one credit card issuer to the next. Most providers will allow you to transfer 70% to 100% of your credit limit.

Getting a credit card

1. What is a balance transfer

A balance transfer is when you transfer debt [such as from credit cards or loans] to another credit card account, usually one with an introductory balance transfer interest rate. For example, if you have a high balance on a store credit card with a 21 percent APR, you may be able to transfer that debt to a credit card with a lower introductory rate, saving money on interest if you pay off the balance by the end of the balance transfer introductory period.

2. How balance transfers work

Consider another example: You have a $3,000 balance on a credit card with an 18 percent APR. You would incur $250 in interest charges if you paid that off with 12 monthly payments of $276.

If you transfer that balance to a credit card that offers a 0 percent introductory APR for 12 months on balance transfers, the new card may charge a transfer fee, typically around 3 percent of the balance. Your new starting balance would then tally $3,090. By making the same monthly payment of $276 for 11 months with one final $54 payment in month 12, you’d save $160 in interest charges. This assumes you do not make any purchases with the card.

The numbers that go into a credit card balance transfer calculation include:

• How much you want to transfer
• Your current card’s annual percentage rate [APR]
• Your new card’s introductory APR
• The term for balance transfers
• Your new card’s standard APR
• The balance transfer fee

When you’re approved for a balance transfer credit card offer, your new credit card issuer pays creditors on your behalf and adds the balance to your new credit card.

If you have any payments due on your old account, you’ll want to pay by the due dates to avoid late fees if the transfer doesn’t go through in time.

3. Does a balance transfer mean you’re closing your old account?

Balance transfers do not automatically close an account. If you want to close a credit card account after you transfer the balance from it, you need to contact the creditor to do so. But you may want to keep the card open, as closing cards has the potential to negatively impact your credit rating. The old card can be an emergency backup card, but be careful not to use a balance transfer to rack up more debt.

4. Is there a limit to balance transfers?

The amount you can transfer will depend on the credit line of the new card. You can transfer the existing balances from any credit account, up to the credit limit on your balance transfer card.

5.  What are the benefits of a balance transfer?

A balance transfer can help you pay off debt when you transfer your balance to a card with a low promo or introductory APR that reduces your interest for a defined time. The introductory APR lets you use the money you would have spent on interest to reduce your debt more quickly.

Unless you have a 0% intro APR or you don’t carry a balance, some of your credit card payment goes to the interest rather than paying down the principal balance itself. Finally, instead of paying multiple creditors on multiple due dates, consolidating all of your balances onto one card with a low or 0 percent promo or introductory balance transfer APR means you only have to keep track of one payment a month. You might find a credit card where the intro APR also applies to regular purchases.

Ultimately, a balance transfer is a money-saving move.

It may be time to explore a balance transfer if you’ve piled up balances that you can’t pay in full each month. If you’re carrying a balance, a lower interest rate is likely to save you money.

You might also consider a balance transfer if you’re struggling to manage multiple due dates. It’s easy to overlook a credit card payment due date when you have several to make each month. Yet doing so repeatedly may impact your credit score. If you find yourself missing payments, you might benefit from the consolidation a balance transfer can offer.

Many credit cards with no annual fee also offer introductory 0% APR balance transfer offers. Compare the terms for no annual fee Discover cards to find an offer that works for you.

8. How to choose the right balance transfer offer

While cardholders with the best credit scores will likely have the most competitive balance transfer options, it’s usually not necessary to have excellent credit to qualify for a balance transfer offer.

Balance transfer credit card offers are sometimes available on existing credit card account[s] with promotional APRs, which apply for a defined time period. Check with your current credit card issuers to see if you qualify for a balance transfer offer on your existing accounts.

If you qualify for an introductory 0 percent APR balance transfer credit card offer, you’ll want to compare the length of the intro period. For example, introductory periods for balance transfer offers can range from six months to more than 12 months. Also consider the overall benefits and rewards of the card, like cash back or miles.

Also compare the balance transfer fees for any cards you’re considering. A balance transfer fee is usually a percentage of the balance you transfer, and it’s paid when you transfer the balance. If you’re paying off a balance over a long introductory period, the balance transfer fee usually is less than the amount of the interest you’ll save, but it’s important to check the fees before you transfer a balance.

Consider how much you can afford to pay to the card each month. Then, look at how that matches up with the promotional period the card is offering. If you still owe a lot on the new card after the promotional period ends, that could reduce any savings you may have gained by transferring the balance. You’d need to step up your payments or choose a card with a longer promotional offer.

9. How to tackle debt with a balance transfer

It’s important to focus on how you can stay out of debt for the long run. Here are some ideas:

• Curb Spending. You don’t want to use a balance transfer credit card as a short-term fix. In other words, you don’t want to continue accumulating debt during an introductory period where you have an APR of 0 percent for a period of time, and then go right back to paying a higher rate with a bigger balance.
• Maximize the Introductory Period. Credit card users who qualify for balance transfer offers should seize the opportunity to pay off as much of their debt as possible before the promotional financing period expires.
• Keep Old Cards. Next, remember that transferring the balance doesn’t close the original card. And you many not want to shut down that card. Closing down old accounts can impact your credit score by changing your utilization ratio or the average age of your accounts.
• Avoid Using the Old Cards. At the same time, you don’t want to make the mistake of racking up new debt on the old card. Doing so can erase any headway you may have made by transferring the balance in the first place.
• Pay On Time. Finally, it’s important to be disciplined about making payments to the new card on time every month. Late payments can wreak major havoc on your credit score and trigger a late fee. Even worse, some credit card companies will increase your APR if you pay late by 60 days or more. The new APR could be much higher than the promotional rate you started out with.

With a little discipline and some research, you can use a balance transfer credit card to get closer to being debt-free.

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