Balance Transfer Fee Caps Disappearing
Published January 9th, 2008 in Credit News.
First, credit card issuers began eliminating no fee balance transfers, and now a slew of banks are beginning to remove or raise the standard balance transfer fee cap of $75 you’ll see with most offers.
Typically, credit card issuers charge a balance transfer fee between $10 and $75, up to 3 percent of the balance.
But now card issuers are beginning to clamp down, likely because credit itself is tightening, and to snuff out balance transfer arbitrage, which does little to help the banks’ profits.
For example, Bank of America, who used to carry a maximum balance transfer fee of $75, will now charge up to 3%, with no maximum dollar value.
So a balance transfer of say $5,000 will result in an associated fee of $150, and this amount can also be added to your first minimum payment, surprising some card holders.
Citibank is now doing the same, with a minimum balance transfer fee of $5, and a max of 3% of the transfer amount, with no cap.
American Express is charging a balance transfer fee of up to $99 on some cards, though they still have their Clear credit card which carries no fee.
Discover got rid of their no fee balance transfer fee credit cards a while back, but has kept the $75 cap on balance transfers for now.
At the same time, the card issuer has limited the 0% APR introductory period for purchases to six months, down from 12 months.
Across the board, card issuers are tightening their grip on consumers, so be sure to double-check the fine print when applying for a credit card to avoid unwanted surprises.
