What is a balance transfer credit card?

Balance transfer credit cards allow you to move debt from one card to another. The new card may have 0% interest rate, so you can clear your debt quicker.

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What is a balance transfer card?

A balance transfer card lets you move debt from one or several credit cards to another. You may have to pay a small fee to do this.

You could stop paying interest on your credit card debt because balance transfer credit cards often offer 0% interest for a set period of time.

You can only transfer a balance from other credit cards or store cards. But you can transfer balances from multiple cards.

The amount you transfer must not exceed the credit card limit on your new card.

Consolidating your credit card debt into 1 place can make it easier to keep track of repayments and manage what you owe.

Balance transfer cards are not designed for spending. Interest rates on anything you buy with a 0% balance card are often very high.

Compare balance transfer credit cards

How does a credit card balance transfer work?

A balance transfer card will often have a 0% interest offer. The offer can last between 6 months to 3 years.

0% balance transfer cards are a good option if you're currently paying high interest on your existing card, or have debt across a few credit cards.

By shifting your debt to a 0% balance transfer card, your repayments will go towards clearing the debt itself, not the interest.

At the end of the 0% offer, the interest rates are usually very high. You should aim to clear your debt by the time the introductory offer ends.

Divide your balance by the number of months the 0% offer lasts and set up a monthly standing order for that amount.

For example, £1,500 on a 0% balance transfer card for 12 months would be £125 per month (1500 ÷ 12).

If you cannot completely pay off your debt before the 0% offer finishes, it might be worth getting another 0% balance transfer card.

You may not be accepted for a balance transfer credit card if you have a bad credit score.

Check you're eligible for a card before you apply to avoid rejection.

Your score could get even worse if you are rejected. This may make it harder to get a credit product in the future.

You can transfer your credit card balance to your new balance transfer card once you've been approved. It may take 1-2 working days.

Do not use your balance transfer card to buy anything. The interest rate on purchases is high and it could void your 0% interest offer.

Case Study - Charles, Croydon

"Over the past winter the boiler in my house broke down. It was out of warranty, and I didn’t have insurance. It cost £1,000 and I charged it to my rewards credit card, which I generally use to collect air miles for holidays.

Being a rewards card, the interest rate is a lot higher than other cards, so I try to pay it off every month to avoid paying interest. With the unplanned charge of £1,000, I wouldn’t be able to pay off my balance in full and I was worried about having to pay interest on top of the £1,000. I’d been furloughed for much of last year, so dipping into my savings wasn’t an option.

So I looked into balance transfer credit cards, which often offer interest free deals to new customers. To be honest, I’d never completely understood how balance transfers work until I needed one myself. Having used Uswitch for energy, I thought it might be a worth trying again to find a good deal on a balance transfer credit card.

I used the eligibility tool to narrow down my options and picked the deal I liked. The rest of it was fairly straightforward. Although I didn’t get as long of an interest-free period as I wanted, at 9 months it still buys me enough breathing room to spread the repayments —  the best part is that I’m not paying interest on top of it, which may have saved me around £100.

One thing I’ve learned is the need to be more financially literate. It seems there are many ways that we can save money that many of us don’t know about simply because we haven’t looked or assumed that it’s too complicated."

Can you get a 0% balance transfer no fee card?

Some cards do not charge you a fee to transfer your balance. You may find it harder to get approved for no fee balance transfer cards.

But most credit cards will charge a fee on the balance you transfer. This is known as a 'balance transfer fee'. It's usually 1 to 4% of the amount you want to transfer.

For example, if you transferred £1,000 with a 3% balance transfer fee, it would cost you £30. Your total transferred balance would therefore be £1,030.

If you are transferring a small amount, you may have to pay a small fixed fee instead of a percentage charge.

These fees are payable upfront.

Interest charges on balance transfer cards

How much interest you pay depends on whether or not you're transferring your balance to a 0% credit card.

If you manage to get a 0% balance transfer card, you do not pay interest on your transferred balance until the 0% deal ends. That's why it's preferable to try to clear the balance before the offer ends.

If you do not transfer to a 0% deal, you'll have to pay the APR on the balance of your new card, plus any fees. This will appear on your next statement.

Where to transfer your credit card balance

You will most likely have to change credit card provider when applying for a new balance transfer card. Very few providers let you stay with them when you transfer your balance.

Compare 0% balance transfer cards to see which are the best on the market.

To help you choose, work out how much you can afford to repay each month and look for a term that gives you enough time to repay your debt.

For example, if you can afford to repay £50 a month, and your balance is £1,000, it will take you 20 months to clear your debt. To avoid paying any interest, you'd need a balance transfer card with a 0% deal that lasts for at least 20 months.

Find the best credit card for you, whether you're looking for 0% card for balance transfers or purchases or day to day spending and rewards