TL;DR summary: 0% balance transfer offers and "free checks usable anywhere"
rarely are a good deal for the customer.
0% rate balance transfer offers (and the checks usable anywhere including payment of taxes) come with a transaction fee because the credit card company is paying off
the balance on the other card (or the tax or the electric bill) in the full amount
of $X as stated on the other card statement or on the tax/electric bill). This is
in contrast to a purchase transaction where if you buy something
for $X, you pay the card company $X but the card company pays the merchant
something less than $X$. (Of course, the merchant has jacked up the sale price
of the item to pass on the charge to you.)
Can you get the credit card company to waive the transaction fee? You can try
asking them but it is unlikely that you will succeed if your credit score is good! I have seen
balance transfer offers with no transaction fees made to people who
have don't have good credit scores and are used to carrying a balance
on their credit
cards. I assume that the company making the offer knows that it will make
up the transaction fee from future interest payments.
A few other points to keep in mind with respect to using a 0% balance
transfer offer to pay off a student loan (or anything else for that matter):
- The unpaid part of the 0% rate balance becomes subject to an interest rate that might be higher than the regular interest rate once the 0% period expires. So, don't pay off more of the student loan than you could have managed to pay directly over the 0% rate period or you will be in a bigger hole when the 0% rate period expires.
- After you accept a 0% offer, your card's status changes to "Didn't pay off last month's statement due in full by the due date" and so interest is charged on new
purchases from the date of purchase, that is, there is no "grace period" of
25 days to pay off the credit card without having to pay interest. The only way to avoid interest charges on purchases is to pay off in timely fashion the entire balance (including the 0% rate balance) shown on the first monthly statement that you receive after acceptance of the offer (balance transfer or check usage). So, at best, the transaction fee will be prepaid interest for a period of 55 days or so, making the APR much more than stated in Dheer's answer. Of course,
if you have a zero balance on the card, and can put away your credit card and not use it at all during the 0% interest rate period, you can make this work in your favor. (There is an answer somewhere on money.SE by Moderator @JoeTaxpayer that describes how he paid off a huge chunk of his mortgage via a 0% rate loan, but very few of us can match his savvy or his iron discipline).
- If you are used to interest being charged from Day One of each purchase and rarely pay off the monthly statement in full, then be aware that if only the minimum payment due is made, that amount will be applied to the 0% balance. Meanwhile, all your purchases and finance charges on them will continue to accrue unpaid. The CARD Act of 2009 mandates that the part of the payment that exceeds the minimum required payment must be applied to the part of the balance that has the highest interest rate. But, the minimum payment due (or any lesser amount) can be applied to whichever part of the balance the credit card company chooses, and they invariably choose to apply it to the lowest interest rate balance.
