Balance transfers - the basics
If you owe money on a credit card, you could use a balance transfer to move the debt to another card to save money.
Your new card provider will pay off your existing borrowing on your behalf. You will then need to pay off the balance on your new card instead, and you can close the old account if you like.
You save money by cutting the interest rate you pay; you could pay none at all with a 0% deal.
Paying less interest means clearing your debt will cost you less (although a balance transfer will not shrink the actual amount you owe).
If you repaid a credit card balance of £3,000 over 36 months with an APR of 17.99%, you would need to repay £106.46 per month at a total cost of £3,831.99.
If you shifted the same balance to a 0% credit card for 36 months (with a 2.67% fee), you would need to repay just £85.56 per month - a total cost of £3,080.10. This works out £751.89 cheaper.
With an interest free deal, 100% of your repayments will go towards clearing the balance rather than paying interest. This means you can pay off the card quicker and cheaper.
You can also use balance transfers to move all of your credit card debt into one place, making it easier to keep track of your repayments and manage what you owe.
When can you use a balance transfer?
Balance transfers are designed for existing credit card debt, so they can only be used to pay off a credit card or store card balance. You can usually only move a balance from a card held with a different provider.
If you want to clear an overdraft or existing loan, you will need to make a money transfer, which lets you send the money you borrow straight to your bank account.
How much does a balance transfer cost?
Balance transfer fee
Most balance transfer deals charge a handling fee, which is a small percentage of the amount you want to transfer (usually less than 5%).
For example, if you transferred £1,000 with a 2.5% balance transfer fee, it would cost £25.
The fee is added to your balance, so in the example above you would then have £1,025 to pay back, which could be much less than the interest you would pay on your old card.
Some cards charge interest on the balance transfer fee, which will take a month or two to pay off, but others charge 0% interest on the fee.
The APR on your new card will determine how much interest you pay; this guide explains how credit card interest and charges work.
Many balance transfer cards offer an interest free period to start with. If you have not repaid the balance by the end of the promotional period you will start to be charged interest on what you owe.
0% promotional period
A longer 0% period lets you pay off the balance with smaller monthly payments than a shorter deal.
If you transferred a balance of £2,000 (with a 2.67% fee at £53.40) and paid it off in full over 10 months, you would need to repay £205.34 per month.
Paying off the same amount over 36 months would cost you £57.04 per month.
What types of balance transfer are there?
0% balance transfers
You can use a 0% balance transfer to avoid paying interest on what you owe for a specified period ranging from a few months to three years or more. Most charge a balance transfer fee of a percentage of the amount you want to move from your existing credit card.
Lifetime balance transfers
Lifetime balance transfers offer you an interest rate that is fixed until the debt is repaid rather than just for several months.
Although the interest rate will be more than 0%, they can work out cheaper if you need a long time to repay your balance or if you do not know how long it will take you.
Low fee balance transfers
Some balance transfer deals come with low handling fees, or none at all, meaning it will cost less up front to move to a cheaper card.
Although these cards do not always offer market leading 0% periods, saving on the transfer fee can work out cheaper overall, especially if you are moving a large balance or plan on repaying the full amount in the near future.
What are super balance transfers?
A super balance transfer is another name for a money transfer, which can send the funds you borrow to your bank account instead an existing credit card. You can use them to fund a purchase or pay off your overdraft or a loan.
Which card should you choose?
You can save more if you find the cheapest deal that offers a long enough 0% period for you to pay off the entire balance.
Once you have worked out how long a deal you need, choose the card that will be cheapest to repay overall when you include the balance transfer fee.
You might want to move a balance of £2,000 and have to pay a 2.5% transfer fee at £50, meaning a total balance of £2,050. If you could afford to repay up to £100 per month, you will need a 0% deal that lasts at least 21 months if you want to repay it interest free.
You could clear the balance in 21 months by repaying £97.62 each month. However, with a 0% deal that last just 10 months, you would need to repay £205 per month.
It depends if you can clear the balance quickly or not. Fee free balance transfer cards work out cheaper if you can repay the full balance before the 0% deal ends.
If you could pay off a £2,000 balance in 20 months on a fee free balance transfer card, you would only need to pay £2,000 in total if you were able to repay it before the 0% deal ended.
However, if you needed a longer term to repay and took out a balance transfer card that charged a fee of 2.67%, you would repay a total of £2,053.40 if you repaid it before the 0% deal ended.
How to make a balance transfer
Find the card you want using our comparison and apply for the one you choose.
Request the balance transfer as part of the application process. You need to state how much you want to transfer and provide details of your existing card number and the name of your old provider.
If you do not request the transfer when you apply, you usually only have one or two months to arrange it once you have set up your new card*. You can either request a transfer by completing an online form or phoning your provider.
Your new provider will then transfer the required amount to your old card, and the amount (plus any balance transfer fee) will then be owed on your new card.
You can then contact your old provider to close your account with them.
How long will a balance transfer take?
How long you have to wait for the transfer to complete depends on your provider; some can take up to four days to make the transfer, and others will send the money the next working day.
Set up the transfer at least a week before you want it completed because you could be hit with late payment fees or interest on your old card if there are any delays.
If you do not want to apply for a new card, you may be able to transfer more expensive debts onto a card you hold already. This can be useful if one of your cards has a much lower interest rate than your others.
Your provider may even offer an interest free period for transfers to your existing card, although these may not be as competitive as deals you can get on a new card.
Transferring a balance to an existing card means you can avoid the credit checks that come with applying for a new one.
When you apply for a credit card, the provider will check your credit history to make sure they are happy to offer you the card.
The longest balance transfer deals will only be available if you have a good credit record. This means that if your credit history is not what the lender is looking for, your application could be rejected or you could be offered a shorter 0% period than the deal advertised.
Applying for too many credit cards can affect your credit score. Here is how to check which cards are likely to accept you without leaving a mark on your credit record, and how to boost your chances.
Some deals are only available if you meet the provider's application criteria, which could include a minimum age or income.
How much can you transfer?
This depends on the credit limit that your card offers. Some providers only let you use 90% or 95% of your credit limit towards a balance transfer; check their terms before you apply.
If you have a credit limit of £2,000, you would not be able to transfer more than £2,000 of an existing balance to your new card (or up to £1,800 if your new provider only lets you use 90% of your credit limit).
With a new credit limit of £2,000 and an existing balance of £2,500, you could still go ahead with the transfer.
You could transfer £2,000 to your new card, which can still work out cheaper than leaving the whole balance where it is. You could then pay off the remaining £500 balance in the following ways:
1. Ask for your new card provider to extend your credit limit before you make the transfer
2. Leave it on your existing card and continue to make repayments - you will only pay that card's interest rate on the remaining £500
3. Apply for a second balance transfer card, although applying for too much credit can damage your credit rating
Can you transfer several different balances?
Yes, you can transfer balances from multiple cards as long as the total amount does not exceed the maximum your new card allows.
You will be charged a transfer fee on each balance you move to your new card.
What should you do when the promotional period ends?
Your interest rate will usually increase significantly at the end of the promotional period unless you choose a lifetime balance transfer card.
You can avoid paying this by clearing the balance before the deal ends.
Make sure you do not miss the date that your 0% period ends by making a note or setting a reminder a few weeks before on your calendar or phone.
If you do not clear the balance before the 0% deal ends, you could transfer the balance to another 0% deal again just before the 0% period ends, although you may have to pay another handling fee.
Paying another transfer fee can still work out much cheaper than paying interest on the remaining balance.
Can you spend on your new card?
Yes, but you may be charged interest if you do.
While your new card might offer 0% for several months for your balance transfer, spending may attract interest (although some come with 0% deals on purchases as well).
You will be charged interest if you do not pay off the amount of new spending on your statement in full each month.
Putting your monthly repayments towards new purchases on your card could also mean it will take you longer to clear the balance you have transferred across.
How much should you pay back?
Your provider will specify a minimum amount you need to pay each month to avoid late repayment charges pushing up what you owe. Some providers will even take away your 0% deal if you fail to meet the minimum payments, meaning you would have to pay a high interest rate instead.
You can set up a direct debit to pay the minimum amount each month, which will cut out the danger of forgetting to pay.
If you want to repay the full balance by the time your 0% deal ends, you will need to pay more than the minimum amount. Divide the amount you owe (including the transfer fee) by the number of months your card is interest free to work out what you need to repay each month.
If your balance and transfer fee came to £5,400 on a card that offered 0% for 36 months, divide £5,400 by 36. You would need to pay back £150 each month to clear the full balance.
What is credit card consolidation?
Debt consolidation is paying off several debts and moving them all into one place by using a loan or credit card to pay off all of your other borrowing.
Consolidating your debts can:
Be much cheaper if the new loan or credit card has a lower interest rate
Be easier to manage because you only make one payment instead of several
To consolidate you credit card debts you could transfer the balance onto a new card or onto one you hold already that has a lower interest rate than the rest.
If you have loans or an overdraft, you could consolidate these onto a cheaper credit card - here is how to use a money transfer to do this.
Can you transfer a balance from another person's card?
Yes, as long as your credit limit is large enough. You will be responsible for paying back the full balance; this guide explains the risks.
Do balance transfers affect your credit rating?
Applying for a new card affects your credit record, depending on your financial situation. This guide explains how your credit record works.