Expect higher balance transfer fees

Balance transfer fees used to be a minor annoyance: typically less than 3% and generally capped at $50 to $75. Now they’re as high as 5% of the transferred balance, with no caps, and issuers may well continue to boost them in their never-ending quest for profits to replace what they lost to credit card reform.

Bill Hardekopf of LowCards.com recently did a round-up of current balance transfer fees by issuer, and here’s what he found:

Chase: 5%
Discover: 5%
Bank of America: 4%
Citi: 3%
American Express: 3%
Capital One: most do not have balance transfer fee, but the Platinum
Prestige card charges 3%

As before, you have to do the math to make sure a balance transfer makes sense, since the fees will offset and could outweigh any interest rate savings. Hardekopf advises that if you need longer than a year to pay off your debt, you should consider a card with a low on-going rate rather than one with an ultra-low teaser rate that will expire.

Hardekopf’s additional advice:

You must pay on time, every time. If you have a late payment, your
introductory period will likely end and you will be assessed the APR
on the transferred balance.

There is no grace period with balance transfers. Interest charges begin at
the time the check is issued to your credit card institution.

You can’t transfer your balance to another card with the same issuer.

It takes about four weeks for the balance to be transferred. Continue to
make all required payments until you confirm that the balance transfers were
made. Multiple balance transfers will process in the order they are
requested on the application.

The new issuer pays the amount of the balance directly to the old issuer
and the amount you owe them will be reduced by the amount you transferred.
The available credit on your new account will be reduced, as if you had made
a purchase.

Transferring a balance does not automatically close your old account. If
you want to close the account, contact the issuer directly.

Issuers have the right to decline balance transfer requests or transfer
less than you requested.