Balance Transfer & Purchases
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What is a balance transfer and purchase credit card?
A balance transfer and purchase credit card allows you to transfer balances (debts) from other cards and continue to make new purchases, both at low- or even zero-interest rates, on one card.
The low- or zero-interest rates are usually offered for a fixed number of months, from three to 30.
How do balance transfer credit cards work?
Balance transfer credit cards allow you to transfer debt from an existing credit card to a new credit card. The new card often comes with a zero-interest offer, letting you pay off your credit card debt within a specified time period without being charged interest.
This zero-interest period can last anywhere from months to years, making it easier to pay off your debt. However balance transfer cards usually come with fees, often as a percentage of the debt you’re transferring over. You can get more information on our page for balance transfer credit cards.
How do purchase credit cards work?
A zero-interest purchase credit card allows you to buy items up front and pay off what you've spent over a set time without paying any interest. If your debt is clear at the end of the agreed zero-interest period, it essentially works as a free loan.
Purchase credit cards are good for everyday use in shops, restaurants or online. They can also be useful for spreading the cost of large purchases to make them more affordable.
However, once the introductory rate period ends you’re normally put on the lender’s APR (annual percentage rate) – which is often quite high, meaning you’ll pay much more interest if you wait too long. You can learn more about the benefits and drawbacks on our guide to purchase credit cards.
According to MoneySuperMarket data, correct as of June 2019
How does 0% interest balance transfer work?
Many balance transfer and purchase cards offer zero interest for a set number of months. This means you don’t pay anything at all to borrow money – though you might have to pay late payment fees.
For example, imagine you pay £2,400 for a holiday with a card that charges 0% interest for 12 months. If you set up a direct debit to pay £200 every month for a year, you’ll clear the debt by the time the 0% offer expires and will have paid no interest at all.
At the same time, you can switch any debts you have on another credit card to your new card. As long as you clear the outstanding balance within the 0% balance transfer period, you will pay no interest. Have a look at our guide to zero-interest credit cards to learn more.
Should I use one credit card for balance transfers and purchases?
If you have existing credit cards debts but you need to spend more money on a credit card, a balance transfer card can be very convenient. You’ll only get one bill to repay each month, one statement to check and one balance to keep an eye on when you use the card.
Difficulty with debt
Zero-interest credit cards can be a useful tool – however you should avoid borrowing more than you can afford to repay.
If you are struggling to pay an existing credit card debt, you should avoid spending on credit cards to prevent your debt from increasing further.
Make sure you pay at least the minimum repayment each month on your credit card debt, or you’ll face late payment fees – any 0% interest period is also likely to be cancelled.
If you are struggling to pay your debts, seek advice immediately. A number of organisations offer free debt advice, including Citizens’ Advice, National Debtline and Step Change.
According to MoneySuperMarket data, correct as of June 2019
Credit card balance transfer fees
Most 0% interest balance transfer credit cards charge a fee to move a debt to the card. This is normally expressed as a percentage of the amount being transferred. For example, if the fee is 4% and you transfer a debt of £1,000, you’ll pay £40 and owe a total of £1,040.
Make sure you factor in balance transfer fees when choosing a balance transfer credit card, as not all cards charge a fee. Read the terms and conditions carefully as most cards do not offer the same deal on balance transfers and purchases.
For example, your card might charge 0% on purchases for 12 months and 0% on balance transfers for nine months – and it can be confusing to juggle the two schedules. You might also be able to get a better deal if you opt for two separate cards.
Compare balance transfer and purchase credit cards
It’s easier to find a better deal on credit cards if you compare your options on MoneySuperMarket. All you need to do is tell us about yourself and your finances, and we’ll show a tailored list of credit cards for you to choose from.
You’ll be able to sort them by the likelihood of you being accepted if you apply, as well as comparing them by interest rates and any benefits or incentives included. Once you find the card you want, just click through to the provider to finalise the deal.
If your application is successful, the provider will set your credit limit, the length of any zero-interest period and card APR.
Remember this may not be exactly the same as the credit card deal advertised – legally this only has to be offered to 51% of all applicants. The deal you get will be decided by your own personal circumstances.
You’ll get your new credit card in the post, and once you activate it it’ll be ready to use.