No Balance Transfer Fee Credit Cards

A balance transfer credit card can be your ticket to savings and out of credit card debt. But you need to use it responsibly. If you don’t, you could wind up making the situation worse.
With that in mind, here are a few balance transfer mistakes to avoid:

1. Assuming 0% balance transfer offers are always around: People often think they can just hop from one 0% balance transfer card to another until debt-free. But if the music stops and you’re stuck with a big balance and a high regular APR, this will prove to be a very costly mistake. And when the economy takes a turn for the worse, it’s very possible that no 0% transfer cards will be available, especially those with no transfer fee.
   
2. Overestimating your ability to pay: This will result in more of your debt being exposed to a card’s regular APR. Considering that the average 0% balance transfer credit card has a regular rate of 17.51%, you certainly don’t want that.
   
3. Forgetting that most regular APRs are variable: When interest rates are hovering near historical lows, there’s really only one way variable rates can go. And it’s not down.

Finally, failing to use a balance transfer credit card calculator is a big mistake. This type of free tool is the best way to plan your payments and estimate your savings. And it will help you pay off what you owe before expensive regular rates kick in.

The value of a balance transfer card depends on four main factors:

1. Balance transfer fee
   
2. Introductory APR for transfers
3. Length of the introductory period
4. Regular APR (applies once the intro terms expire)

It can be difficult to balance all of these terms. So we recommend using a balance transfer calculator. This will help you determine not only how long it will take you to pay off your balance, but also which balance transfer credit card will save you the most money.

If you anticipate being able to repay your full balance within a card’s 0% intro period, you can focus on avoiding a balance transfer fee. The regular APR won’t affect you, after all.

But if you don’t think you’ll be approved for a card with a long enough 0% intro period to repay your full balance, the regular rate will indeed come into play. And the card with the longest introductory period won’t necessarily be the best balance transfer credit card for you. So you’ll have to compare the cost of paying down what you owe with each card you’re considering. And you’ll need to take into account how much you expect to owe at the end of each card’s 0% period as well as how expensive that amount will be, in light of each card’s regular APR.

Finally, don’t make the mistake of assuming another balance transfer credit card will be available to bail you out if you don’t reach debt freedom by the time regular rates take effect. Many people learned this lesson the hard way during the Great Recession.

For starters, you shouldn’t even consider a balance transfer credit card that doesn’t have either a 0% intro APR or a $0 balance transfer fee. And ideally, you want both. The easiest way to compare balance transfer credit cards is in terms of your total expected cost. In other words, how much will you have to spend on fees and interest charges while paying your balance down to zero? And the easiest way to crunch those numbers is with a credit card calculator.

​​​​But if you want to do things the hard way, we’ll try to make it as easy as possible for you. If you want to see how a 0% balance transfer credit card stacks up against a credit card with no transfer fee, divide the 0% card’s balance transfer fee by the length of its intro period (in years). For example, a card with 0% for six months and a 3% fee is basically the same thing as a card offering 6% and no fee (3% / 0.5 years = 6%). This is a rough way to convert a balance transfer fee into a balance transfer APR, thus turning an apples-to-oranges comparison into a level playing field.

When people talk about no fee credit cards, they usually mean those without annual and monthly membership fees. But some folks want more: a truly fee-free credit card, with no past-due fees, over-limit fees, balance-transfer fees or foreign-exchange fees, either. Cards lacking all such fees do indeed exist. The PenFed Promise Credit Card is one good example. However, there are two important things you need to understand about such offers:

First, if you need a card without over-limit and past-due fees, you shouldn’t be looking for a credit card at all. The damage you’ll do to your credit by missing payments or maxing out your spending limit will surely outweigh whatever you save by avoiding fees for those offenses. This is especially true in the post-CARD Act era, as penalty fees can’t exceed the actions that trigger them. For example, if you spend $5 more than your allotted credit limit, the maximum fee would be $5.

Secondly, there’s no perfect credit card. Every offer has its fair share of pros and cons, and credit cards that lack fees entirely usually compensate by offering worse rewards or interest rates. That’s why credit cards without balance transfer fees have relatively high APRs, why rewards cards without fees tend to offer reduced earning rates, and so on.

The moral of the story is that you should compare credit card offers solely based on the features that will affect you most, given your spending and payment habits. After all, if you plan on using your card for rewards, why would you care if it has a balance transfer fee?

No balance transfer is guaranteed to be free, but some credit cards do offer the potential for a free balance transfer from time to time. More specifically, it’s not unheard of for a credit card to offer a 0% intro APR on transfers without charging a balance transfer fee or an annual fee. So if you get such a card and repay what you owe by the time regular rates take effect, you’ll have yourself a free transfer. But if you have a balance remaining at that point, or you miss a monthly minimum payment along the way, you’ll end up paying interest.

Free balance transfer credit cards are not common, though. Chase Slate® is a notable example. But there used to be far more options. Now, banks tend to offer either no balance transfer fee credit cards or 0% balance transfers, but not both.