Should you get a credit card with no balance transfer fee?

If you have credit card debt, you might have considered using a balance transfer credit card to help pay it down. When done right, these types of credit cards can be useful tools, with some options even skipping the traditional balance transfer fee. However, it's still important to understand the details of any balance transfer credit card offer to ensure it's the right option for you.

Let's explore the ins and outs of credit card balance transfers, including when the fee is worth the cost and tips to compare balance transfer credit cards.

What is a balance transfer fee?

A balance transfer fee is a fee that credit cards charge when transferring debt from one card to another. Average balance transfer fees will be 3-5% or $5, whichever value is greater.

Is a balance transfer fee worth the transfer?

In order to figure out whether you'll save on interest with a balance transfer, you need to calculate how any balance transfer fees compare to your potential savings. You can do this using a balance transfer calculator, or you can figure it out on your own in a few simple steps.

How to figure out if a balance transfer will save on interest

1. Figure out how long it will take you to pay down your debt.
2. Calculate how much interest your debt will accrue in that time on your current card, based on your current credit card APR.
3. Add up any balance transfer fees for a new card.
4. Subtract the fees from the future interest. What's left is what you could save on interest from a balance transfer.

What does it mean for a credit card to have no balance transfer fee?

Some credit cards will offer introductory balance transfers with no fee, meaning you can move debts to the card without paying a percentage of that debt.

However, it is important to weigh the value of the balance transfer fee against all the elements of opening a new card. For instance, it can help to pay attention to the length of the introductory low APR period as well as the interest rate on new purchases, and watch out for annual fees associated with the card.

Comparing balance transfer cards

When comparing balance transfer cards, there are multiple factors to keep in mind.

• Low intro APR: How long do you have before the regular APR kicks in? Can you pay off the balance before then to avoid paying interest on your debt?
• Balance transfer fee: Given the fee, can you still save money on your debt?
• Annual fee: Is there an annual fee? Will you get enough value out of that credit card to justify the annual fee?
• Credit: Can you qualify for a new balance-transfer credit card based on your existing credit? Do the offers you can qualify for meet your needs?

If you plan to use your new card for purchases as well as a balance transfer, you may also consider the intro APR period for purchases and the interest rate after the introductory period ends.

What are alternatives to a balance transfer?

If you're not sure a balance transfer is the right option for you, you may want to consider a personal loan. Much like balance transfer offers, the personal loans and interest rates that you qualify for will depend heavily on your creditworthiness. That said, some people may find personal loans offer a better interest rate for the long term.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.