Balance Transfer Fee
Many cards now charge a percentage of balances transferred onto them
Introductory balance transfer offers have been incredibly popular with credit card users over the last 5 years or so since they were introduced to the UK by Egg plc, especially when people discovered that by constantly moving balances from card to card as the introductory periods ended, they could in effect get an interest free loan over an indefinite term.
This phenomena of the card tart ended up costing credit card companies a small fortune in uncollected interest, and not surprisingly the industry began to look for a way to tilt the balance back into the card companies' favour.
The result was the balance transfer fee, where a percentage of the balance you transfer to a new card is charged to your account. A typical rate for this charge is 2%, which could work out to be a hefty sum if you're transferring a substantial amount.
In practice, most cards who charge a fee cap the amount they charge at a maximum of £50 or so, but check the small print carefully - some cards have no upper limit to how much they'll charge.
More on 'Credit Cards':
Affinity Card
Flat Rate Credit Cards
Related Links:
Compare Balance Transfer Fees - Find out which cards charge for a balance transfer
Balance transfer fees proliferate - 'The days of free 0% balance transfer credit cards are coming to an end with nearly a third of cards now charging a fee...'
