Vision Credit Education, Inc.

It appears that Discover has so far resisted some of the minimum payment and interest rate increases announced by several other credit card issuers. What they have done is to quietly remove the cap that limited transaction fees on balance transfers.

Balance transfers usually come with a transaction fee equal to 3 or 4% of the amount transferred. In the past, this fee used to be limited to $50 or $75 for larger transfers. This cap has been removed, which will allow for the charging of a much higher balance transfer fee.

For example, a previous balance transfer of $8,000 might have been capped at $50 or $75 before, depending on the terms of the particular card. However, Discover can now charge 3% of that amount as a transfer fee, which would equal $240 in this example.

Although this increases the cost of balance transfers, many offers may still be worth it if they reduce overall interest paid on a debt balance. If you are contemplating a balance transfer offer, understand that many creditors will add this balance transfer fee into the next month’s required minimum payment. This could raise your payment substantially for one month, which might exceed your ability to pay.

In the end, evaluate each balance transfer offer to see if it makes good economic sense for you to commit to it. Most creditors have already removed this cap, so Discover is in line with what other major card issuers have done.