Balance transfer credit cards let you pay off existing debt by transferring your balance from an existing card to a new card with a lower interest rate. This means you could clear your debt faster as you won't be paying as much interest.

Find out more about how balance transfers work

A credit card balance transfer should be used when the interest rate on your current credit card is too high, and you want to pay off a sizeable balance.

With a balance transfer to a new card, you could pay off your debt at a monthly cost you can afford.

If you are looking to cut interest on your balance and find the best card to make purchases at the same time, you may be able to find a balance transfer and purchases credit card to help you do both.

You can compare balance transfer and purchase credit cards here

Remember that you can't transfer a balance between cards from the same bank/provider. For example, if you have a Natwest credit card, you can't transfer the balance to a Natwest balance transfer card.

With a 0% balance transfer credit card, the introductory interest free period can range from two months all the way up to 29 months.

The longer the introductory period, the more time you will have to pay it back, without paying interest.

Most providers will state that you must complete the balance transfer within a set period for you to get the 0% deal. For example, you may have to complete the balance transfer within 60 days of opening your balance transfer credit card. This is to stop the rate rising and any fees being applied.

How long you need to pay off your balance depends on how much you can afford to pay every month. Paying off your balance within the interest-free period helps you save money.

The interest rate usually increases sharply to what is known as the Standard Variable Rate (SVR) or the 'revert rate'. This is why it's important to pay off your balance within the interest-free period.

  • If you paid your balance in full: You have nothing to worry about. You can either cancel the card, or keep it to make purchases in the future.

  • If you still have a partial balance remaining: You could opt to get another 0% balance transfer card for the remaining balance and pay it off without paying interest.

Some credit cards will charge what is known the balance transfer fee. This is either a flat fee or a small percentage of the amount you want to transfer. This usually added to your balance.

If you make a balance transfer of £2,000 to a credit card with a 2% balance transfer fee, it would cost £40, making your total transferred balance £2,040.

The balance transfer fee typically ranges between 1% and 5%. Some providers will also charge a set fee if you have a small balance to transfer.

You may be offered a balance transfer credit card with a fee of 2.9% or a £5 minimum. If you want to transfer £150 to this card, 2.9% of your transfer amount is only £4.35, so you would have to pay the £5 minimum.




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As with most finance products, there are advantages and disadvantages of doing a balance transfer:

Pros:

  • helps you save on interest payments

  • allows you to consolidate debt and pay it off quicker

  • can be useful to spread the cost of large expenses

Cons:

  • you may have to pay balance transfer fees

  • missing a payment can cost you your 0% interest rate, and you could end up paying more in interest than you were before.

  • Having a new credit card can tempt you into unnecessary spending.

1. Calculate your total credit card debt

Add up you credit card debt prioritising those which charge the highest interest. Divide your balance by how much you can afford to pay every month and find out how long you need to pay off the whole balance. For example, if you need to pay off £1,200 and you can afford to pay £200 a mont, then you'll need 6 months, to pay off the whole balance.

2. Compare balance transfer credit cards

There's a lot of balance transfer deals to choose from, but all of them have different features. So choose one the suits your specific circumstances.

Here are some steps to take when comparing balance transfer credit cards:

  • Use the comparison above to find the best deals. Look for cards with a 0% interest period that is long enough for you to repay the whole balance.

  • Check the fees for each balance transfer credit card. This is charged as a percentage of the amount you transfer (although some cards come with no fee).

  • Check what the 0% rate covers. Typically, the 0% introductory offer applies to balance transfers and not purchases. This means you'll usually have to pay higher interest rates on any purchases with the balance transfer credit card.

  • Check your credit score. The best deals will only be offered to you if you have a healthy credit score.

3. Apply for a balance transfer credit card

Once you've chosen the balance transfer card that suits your needs, you can fill out an application. It can take up to a week or more to hear back on whether you've been accepted.

Make sure you keep on making payments on your existing credit card until your balance has been transferred.

4. Start paying off your debt

Once your balance has been transferred you can start making payments. To make the most of your 0% balance transfer credit card, try to pay off the whole balance before the interest free period ends.

If you've got bad credit, there are still some options for you to get balance transfer credit card. It's likely that you'll have to pay a higher balance transfer fee and that the 0% interest period will be much shorter, typically ranging from five to nine months.

It's also likely that you'll be offered a lower credit limit, and that the APR once the interest free period ends will be much higher, i.e above 30%.