Balance Transfer? Negotiating Your Transfer Fee

A balance transfer allows you to move your balance from one credit card onto another. The main purpose of this is to reduce your interest rate. You may find a better rate on another credit card, and the reduction can even compensate for the downsides of transferring. One of the downsides is a potential drop in your credit score. This can be overcome within a few months of paying off the new card. The other downside is a transfer fee, which can be negotiated down in some cases. 

Learn Transfer Fees up Front

You should be aware that every balance transfer will come with a fee. Credit card companies will not be up front about the costs of transfer, so it is up to you to discover the real costs. You will find the transfer fee in your quote or credit card contract. The fee can range from 2 to 5 percent on average. The size of the fee partly depends on the size of your transfer and your credit history. At times, credit card companies will offer transfers at no cost as part of a promotion. Be wary of these offers, as they can indicate high interest rates in the future.

Find Comparable Fees

When you approach a negotiation, you will need to have some factual information on your side to support your argument. Therefore, it is best to learn comparable transfer fees in the industry before attempting to lower your own. You can call several credit card companies to ask their fees. You may even find one you like better. If not, simply use the low fees as a standard of comparison to the one your selected company is offering. 

Determine Final Cost and Savings

You will want to have a target rate in mind. Start by determining how much you will save through the transfer to lower rates. Remember to calculate this based on Annual Percentage Rate instead of flat interest rate, since credit card balances revolve month-to-month, and the annual rate is more important. Once you know the savings, you will want to factor in how much you will lose due to the transfer fee. You should end up with a large savings in the end. If the transfer fee is too high, the savings will not be worth the effort. Use this as pat of your discussion. Tell the company exactly what you hope to save through the transfer and the fee you will need to make this happen.

Call Directly

Finally, once you have done all the research, it is time to pick up the phone. Attempting to negotiate a fee online may not get you very far since you are rarely dealing directly with a representative. Instead, call the sales number for the company. You will find the responsiveness on the sales number is high because the company wants to generate new business. Tell the agent your desired rate, explain your comparable options and discuss what you hope to save in the transfer. You may additionally tell the agent how much business that would amount to for the company to help sway the sale.

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