Anup Nair
M.B.A., Assistant Teaching Professor, Marketing, Austin E. Cofrin School Of Business, University of Wisconsin – Green Bay
Do people pay enough attention to balance-transfer fees when shopping for a balance-transfer credit card?
Attention is a scare currency, especially when there are a lot of things weighing on your mind. Add to this the constant barrage of marketing communications – it’s no wonder that often, the fine print is either forgotten or missed. Let’s consider the below pointers for transfer-fee related marketing that we see often:
- The fee is often overshadowed by intro-APR marketing. Credit-card issuers tend to highlight the 0% interest period prominently (e.g., “15 months 0% APR on balance transfers”), which makes the offer look very attractive — and can overshadow the fine print about transfer fees. The low (or zero) interest is what grabs attention; the one-time transfer fee often gets less scrutiny, especially if it’s described only in small print.
- Consumers underestimate the cost impact. A balance transfer fee is usually quoted as a small percentage (e.g., 3%–5%), which may seem modest — but on significant balances that adds up.
- Behavioral inertia / complexity aversion. If consumers feel the balance-transfer process is complicated (forms, timing windows, eligibility, fine print), they may commit without analyzing every cost component — especially if they don’t expect the fee to be high.
Given the above, I believe that a substantial segment of balance-transfer credit-card users underestimate or under-focus on transfer fees.
Do credit card companies need to do a better job of disclosing balance-transfer fees?
Yes — from both an ethical transparency standpoint and as a matter of sound long-term marketing strategy, they should do a better job. Here’s why:
- Transparency builds trust. When an issuer prominently discloses both the length of the 0% period and the exact balance-transfer fee (plus how/when it’s applied), it reinforces that the company isn’t glossing over “gotchas.” This can build stronger trust with customers — especially those trying to manage debt.
- Long-term loyalty over short-term signups. While a strong 0% offer may drive signups, an unpleasant “fee surprise” might lead users to view the issuer as exploitative or opaque. Over time, that may damage brand loyalty — and word-of-mouth.
Why aren’t there more credit cards with no balance transfer fee?
My understanding is that there are several structural and strategic factors that limit the distribution of true “no balance transfer fee + 0% intro APR + no annual fee” cards.
- A “balance transfer” is essentially the issuer taking on someone else’s debt. If the issuer offers 0% APR and doesn’t charge a transfer fee, and if the consumer pays off quickly, the issuer might earn little or no money.
- Such a card may have a chance to be exploited which might increase the issuer’s administrative burden, risk exposure (if the borrower defaults), and reduces long-term profitability.