Watch for higher balance transfer fees

If you are considering transferring a balance from one credit card to another, be aware that some credit card companies have raised balance transfer fees recently.

Recent changes brought forth by the CARD Act have spurred additional changes to items not specifically covered in the Act. Balance transfer fees fall into this category of “items not specifically covered in the CARD Act.”

Not too long ago, many balance transfer fees hovered near the 3% mark, but it also wasn’t uncommon to find balance transfer offers that included no balance transfer fee. Currently, no-balance-transfer-fee offers are virtually nonexistent and some companies have raised balance transfer fees to as high as 5%.

In addition to raising the fee – from 3% to 5%, for example – some banks are also eliminating caps on balance transfer fees. For example, Card A has a 3% balance transfer fee with a maximum fee of $100. So, if 3% of your balance is greater than $100, you still are only charged the maximum of $100.

But Card B may now, for example, have a 5% balance transfer fee with no maximum fee. This means that you would be charged 5% of your balance with no limit on the fee.

Using the example cards above, you would be charged $100 for transferring a $5,000 balance to Card A, and would be charged $250 for transferring a $5,000 balance to Card B. Quite a difference.

See also: What is a balance transfer fee?

Not all companies are raising balance transfer fees at this time, but it is something to watch out for in 2010 and beyond. If you are considering a balance transfer from one card to another, be sure to take any balance transfer fees into consideration when weighing your options.