Most banks charge a one-off 1-3% BT fee on balances transferred. Save more money and compare cards with no balance transfer fee.
Balance transfer fees are now the norm for credit cards in Australia. A balance transfer fee is a one-off fee charged to you by your new credit card provider to establish a credit plan for the amount you transfer onto your new credit card from your old card. If there is a balance transfer fee charged, our comparison tables will show it and the savings calculation will factor it in. Generally, a balance transfer fee is charged straight away and will appear on your first credit card statement.
When you apply to transfer a balance, you are effectively applying for a loan, in addition to any credit that may be extended to you for each month’s purchases. The card provider needs to establish a credit plan, check your credit history, pay off an amount on your old card and charge it to your new one. This all takes time and costs money, and balance transfer fees are simply an attempt to recover these costs. Card issuers who do not charge a transfer fee are sacrificing profit in order to make the offer appear more tempting, but there may be other ways in which they try to recover their costs or make more profit. That’s why it’s important to compare all features of the offer.
Many banks charge a one-off handling fee for doing a balance transfer. This balance transfer fee typically ranges between 1% to 3% of the amount you transfer and it is charged upfront when you are approved for the new card. If you transfer $5,000 to a card with a 1% BT fee then you’ll be charged $50 for doing the balance transfer. This is in addition to the annual fee, which is a separate charge. To make it easy to see if it is worth paying the balance transfer fee, Credit Card Compare’s comparison tables have included the balance transfer fee (for cards that charge the fee) in the calculation of your potential savings.
You can see the calculations in the ‘Money saved’ column on our ‘Balance Transfer Credit Cards’ pages, where it’s also possible to sort cards in order of the net amount saved.
Not necessarily. In most cases the interest savings will far outweigh the transfer fee. So with a long-term balance transfer, of 12 months or more, a transfer fee is a much smaller proportion of the interest amount saved.
Consider a situation where a $5,000 debt is being transferred from a card where it was incurring interest at 20% p.a. A 2% minimum monthly repayment is required by the new card, and both the old and new card have the same annual fee.
Therefore, the shorter the zero-interest period is, the more important it is to avoid a balance transfer fee. Conversely, the longer the zero-interest period is, the less significant the transfer fee becomes. Ideally of course, look to maximise your savings by trying to find a long-term offer at 0% with no balance transfer fee.
Although you may be saving money by not paying a balance transfer fee, before you make your decision you should also look at the following fees and charges which you may incur on your new card: