How Do No Fee Balance Transfer Credit Cards Work?

No Fee Balance Transfer Best Buys No Fee Balance Transfer FAQ's Have a question? Send in your question and we'll do all we can to help answer it. Where appropriate user questions will be added to the FAQ's for future use. Most recent questions: Which is better a no fee balance transfer or a 0% rate? More frequently asked questions »

By moving outstanding credit card balances to a new credit card, you can benefit from some really great rates and not only save money in interest charges, but actually get back on top of your debts and start clearing them more effectively.

No fee balance transfer credit cards offer the ability to move existing card debt to a much cheaper interest rate without the added cost of transfer fees.

What is a balance transfer handling fee?

Credit card companies recently added balance transfer handling fees to the majority of balance transfer deals.

These fees were introduced to try and counteract the money credit card companies were losing from offering 0% rates on transferred balances.

Why am I charged a balance transfer handling fee?

The balance transfer fee is a 'handling fee' charged for the administration process of moving a balance (or balances) from another credit card to the new card.

The balance transfer fee is payable to the credit card company you are moving your balance to - where you will receive a reduced or promotional interest rate.

How much do balance transfer handling fees usually cost?

The balance transfer handling fees that have been introduced do vary from card to card, but they will usually be a percentage amount of the balance(s) you are transferring.

Generally, the balance transfer handling fee will be around 2% - 3%. So for transferring a balance of £2,500 you could have to pay around £75 (based on a 3% fee).

Some balance transfer credit cards may offer 'capped transfer fees'. Which means that they will set a maximum charge on their transfer fee - usually around £50 to £100.

Capped transfer fees can save you money if you are transferring large balances, however the cards offering capped fees are usually not the cards offering the longest 0% deals - so the actual savings can be negated.

What do no fee balance transfer credit cards offer?

No fee balance transfer credit cards still offer the process of moving your outstanding balance to the new card for free - effectively waiving the balance transfer handling fee.

Because no fee balance transfer credit cards do not charge a fee for obtaining their promotional balance transfer deal, there are no initial costs involved when taking out these credit card offers.

Are the balance transfer deals any good?

Unfortunately, the few no fee balance transfer credit cards still available are not the balance transfer credit cards offering the longest 0% deals.

In fact, no fee balance transfers have become pretty much limited to 'life of balance transfer' deals - that is, a very low (but not 0%) interest rate offered until the balance is repaid in full.

Life of balance transfer credit card deals are actually pretty good though - especially if you have a large outstanding credit card debt to repay and you know it's going to take a fair bit longer than 1 year to clear it.

Life of balance transfer deals offer the peace of mind that you have as long as you need to clear your balance, whilst still offering a much cheaper rate than you would find on any standard rate credit card.

Is it worth choosing a no fee balance transfer deal over a better balance transfer deal?

The answer is variable - depending upon your personal circumstances and requirements for repaying your outstanding credit card balances.

As much as, "Is a 0% balance transfer credit card better than a life of balance transfer credit card?", is a hard question to answer - the same is true for whether choosing a no fee balance transfer credit card over the longest 0% balance transfer credit card is worth it or not.

If you want longer than 1 year to repay your balance, and you don't want the worry of ending promotional periods - the simplicity of a life of balance transfer credit card deal is perfect.

Choose a life of balance transfer deal with no transfer fee, and you'll be saving a little more money from the off.

However, if you know you can clear your current balance in a year (or just over), or you are more than happy to transfer your balance again in a year - then choosing the longest 0% balance transfer credit card will, more than likely, save you more money in the long run - as the interest charges you will save will easily outweigh the cost of the transfer fee.

Compare 0% balance transfer credit cards - and find the longest 0% deal.

Compare no fee balance transfer credit cards - and save money on your initial outlay.

What should I look for when choosing a no fee balance transfer credit card?

When comparing no fee balance transfer credit cards these are the main points you should consider before settling on your choice of credit card:

1. What is the balance transfer offer?
1. What is the interest rate on balance transfers?
2. How long does the balance transfer deal last?
• Tip: Choose a 0% balance transfer offer if you can repay the balance within the introductory period, or if you do not mind moving the balance once the introductory period has finished.
• Tip: Choose a life of balance transfer offer if you want to repay the balance over a longer period of time and do not want the worries of ending introductory periods.
2. How long do you have to transfer your balance to qualify for the promotional deal?
• Tip: Some credit cards require you to make the transfer within a set time period to qualify for the 0% or low interest rate. This is sometimes 3 months, but check the credit card details and transfer within this period, or to play it safe, submit your balance transfer during card application.
3. How will payments made to the card be allocated?
• Tip: If payments are allocated first to promotional balance transfers, be careful of using the same card for any purchase or cash withdrawal transactions, as you will not be able to repay these transactions until your balance transfer is repaid in full, allowing them to accrue interest charges. The best advice is to use a separate credit card for any purchases or cash withdrawals that you may need to make. See low purchase rate credit cards or 0% purchase credit cards.
• Tip: The 'allocation of payments' clause for each credit card can be found in the credit card's Summary Box as well as the Terms & Conditions - found on the credit card issuer's application website - when you click any of the 'apply now' button links on this site. The summary box is a simplified and easier to read version of the terms and conditions.
4. Is there an annual fee to pay?
• Tip: Few credit cards charge an annual fee, however it is important to find out, especially if you will just be using the credit card for a balance transfer.

Compare no fee balance transfer credit cards