Discover Removes Cap on Balance Transfer Fee
Discover has apparently removed the cap on its balance transfer fee. According to a Los Angeles Times article on how credit card issuers are tightening credit standards and cutting credit limits, Discover Financial Services removed the cap on the maximum fee that it would charge for balance transfers on November 1st.
For those that aren’t familiar with balance transfer fees, the balance transfer fee is the one time charge from the credit card company that is tacked on to the balance transfer. In my experience, it is typically three percent of the amount of the money borrowed. Based on the offers that I have seen recently, the cap on the balance transfer fee is typically about $200 or $250, though I have no idea where the prior cap on the transfer fee for Discover credit card balance transfers was set.
I remember back in the day (about four years ago) when credit card balance transfers cost 3 percent of the amount of the transfer, with a minimum of $5 and a maximum of $50. Ahhhh …. those were the good ole’ days of easy credit.
It’s no doubt part of the efforts of credit card companies to increase their fees in order to cover their increased loan losses. The L.A. Times article noted that the average late fee for a late payment on a credit card has increased 10% over the last year.
