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Avoiding balance transfer fees

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Frequent Contributor

Avoiding balance transfer fees

Hi guys, first post on the forums here, long-time lurker. I though I would share a technique I came up with for moving a balance from one credit card to another and avoiding the 3% or 5% fee that's normally associated with doing so. Many of you may already know this, but maybe this will be helpful for someone.

Note that you cannot take advantage of 0% APR or other balance transfer promotions using this technique - this technique is best used when transferring to a card that doesn't offer any balance transfer incentives.

What I do is I use the card (that I want to transfer the balance to) for everyday items that I would normally use my checking account for; rent, gas, utilities, basically everything I can. Then, I immediately make a payment to my other card (the one I want to transfer the balance from) for the amount of those purchases. Bing bang boom, that amount of the balance is now moved from one card to the other, for no fees.

 

Example:

 

Card 1 has a balance of $2500 / $5000 SL.

Card 2 is a new card with a balance of $0 / $5000 SL.

 

You want to move $1250 from Card 1 to Card 2 (maybe for the lower interest rate, or maybe to reduce your util. on Card 1)

 

Instead of transferring the balance directly and paying $37-63 in fees, you use Card 2 to pay for $1250 in purchases you were already going to do anyways - say, a $300 electric bill, $200 in gas, $600 for health insurance, $150 in groceries. Then, you immediately make a payment to Card 1 for $1250. Done! Free balance transfer.

    Total CL: $21,100
Fico 8 Scores:
12/2018:
03/2019:
06/2019:
09/2019:
Goals:   550 by 12/2018 600 by 3/2019   650 by 6/2019   700 by 1/2020   750 by 1/2021 800+ by 1/2022
8 derog. (all settled 1/2019)     |     Inquiries: 10, 9, 6     |     AoOA: 10.0yr     |     AAoA: 5.2yr     |     AoYA: 0.4yr
Message 1 of 20
19 REPLIES 19
Community Leader
Super Contributor

Re: Avoiding balance transfer fees

Sounds too complicated. Just get a Comenity Visa and roll the diceSmiley Wink
#ChaseCreditCardHobby Enthusiast
2022
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Message 2 of 20
Community Leader
Mega Contributor

Re: Avoiding balance transfer fees

None of the cards that I have can be paid with another card. 

 

Also, what happens when all those "balance transfers" remain unpaid on the second card? Even if possible, you could do this couple of times and you'll be done as second card is now maxed out without a significant pay down.  If you can actually pay it, why bother with first part anyway? 

 

 

 

 

 

 

 

 

 

EX 759 EQ 774 TU 753


Message 3 of 20
Frequent Contributor

Re: Avoiding balance transfer fees

Huh? Neither of your questions pertain to the content of the OP.

 

The trick involves neither paying a credit card with another credit card, nor making a payment that you can't afford.

 

Maybe I did a poor job of explaining it, if so I apologize and would be happy to clarify if it still doeswn't make sense after reading it again.

    Total CL: $21,100
Fico 8 Scores:
12/2018:
03/2019:
06/2019:
09/2019:
Goals:   550 by 12/2018 600 by 3/2019   650 by 6/2019   700 by 1/2020   750 by 1/2021 800+ by 1/2022
8 derog. (all settled 1/2019)     |     Inquiries: 10, 9, 6     |     AoOA: 10.0yr     |     AAoA: 5.2yr     |     AoYA: 0.4yr
Message 4 of 20
Moderator

Re: Avoiding balance transfer fees

Maybe I'm missing something, but I don't get it.   So, how is this a "balance transfer" if not technically transferring the balance between both cards?  So, if I'm interpreting this proposal, all I'm doing is shifting the purchases to card #2 and paying card #1 for the incurred purchases on card #2?

 

RuPaul.gif

Message 5 of 20
Frequent Contributor

Re: Avoiding balance transfer fees

Here's a different way of explaining, hopefully this makes more sense.

 

Again, in this example, Card 1 has a balance that you want to transfer to Card 2.

 

Let's say you need to pay a utility bill, or anything else you normally pay using your checking account.

Instead of using your checking account to pay the utility bill, you instead pay that same amount to Card 1.

Then, you pay the utility bill using Card 2.

 

That's it. You're not paying a credit card with another credit card, and you're not paying anyone any money you wouldn't already have been paying anyways. And you got to transfer, for free, the amount of the utility bill from Card 1 to Card 2.

 

Then, just keep doing that for other everyday expenses until the balances of Card 1 and Card 2 are where you want them to be. Does that make more sense?

 

Edit: it isn't a "balance transfer" in the tradition sense, as it involves different steps than a traditional balance transfer, but the net result is the same - some (or all) of your balance from one card gets removed, and then added to the other card. And you avoid the 3-5% fee that would normally be associated with doing that by causing the new credit card's company to consider it a no-fee purchase rather than a 3-5% fee balance transfer.

    Total CL: $21,100
Fico 8 Scores:
12/2018:
03/2019:
06/2019:
09/2019:
Goals:   550 by 12/2018 600 by 3/2019   650 by 6/2019   700 by 1/2020   750 by 1/2021 800+ by 1/2022
8 derog. (all settled 1/2019)     |     Inquiries: 10, 9, 6     |     AoOA: 10.0yr     |     AAoA: 5.2yr     |     AoYA: 0.4yr
Message 6 of 20
Community Leader
Mega Contributor

Re: Avoiding balance transfer fees

Again, you're paying one card while allowing balance to accumulate on the second card. Unless second card is in promotional  0%, you will still be incurring interest, albeit at lower rate. 

 

That may be preferable to higher interest card, till you realize you cant pay the second card and still have balance on the first card. Now you have two cards accumulating interest.   

 

Is that when the third card comes in play? 

 

 

Maybe it's me. 

 

 

EX 759 EQ 774 TU 753


Message 7 of 20
Super Contributor

Re: Avoiding balance transfer fees

I get what you’re going for here but there’s more to a balance transfer. 

 

Most people only do a balance transfer if there is a no or very low APR intro period involved. This would work if the card was just opened and still in its intro APR but if you have to ability to pay such a large amount off anyway, you wouldn’t need a BT at all. You’re essentially just using another card for purchases and creating new debt while paying off the old where a BT moves the debt from one card to the other without any payment needed. 

 

@FinStar I could watch that Mama Ru gif all day 😂 


01/2019:
10/2019:

Hover over my cards to see my limits!
Goal cards: Cash+, Freedom.
Message 8 of 20
Community Leader
Mega Contributor

Re: Avoiding balance transfer fees

If you want to avoid BT fees, there are cards that dont charge them. 

I think that's a much better idea but if this works for you, great. 

EX 759 EQ 774 TU 753


Message 9 of 20
Super Contributor

Re: Avoiding balance transfer fees

So, Card 1, the one you are transferring to, has 0% on purchases, correct?
If so, yes this is a method to put normal charges on the new card, park those for later / slower payment, and use that cash to pay down the higher APR card.

Works with a new app.
High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
Message 10 of 20
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