Balance transfer credit cards

There are a number of factors that affect your credit score, including the number of credit applications you’ve made, your employment status and whether you’re on the electoral register.

As such, making a new credit application – even for a balance transfer credit card – can cause an initial drop in your credit score. However as with any kind of credit product, if you make your repayments on time your score should eventually start climbing again.

When you get your new credit card, you should destroy any old ones you have – even though they may be expired or the account may be closed, an identity thief can still use the information on the card.

You should be able to transfer any existing credit card balances on to your new credit card. But it isn’t usually possible to transfer a card balance between two cards issued by the same bank or banking group. 

Most providers will let you transfer balances between £100 and £10,000 to a new card – at most, around 90% of your current credit limit.

Balance transfer fees are generally given as a percentage of the overall amount you’re transferring – this will usually be between 1% and 3%, but could range anywhere from 0.5% to 5% of the total sum.

Some balance transfer deals may be fee-free, but typically they will have shorter 0% interest periods.

If you have a balance on one or more credit cards that you can’t repay in full it is likely you’re paying a high standard APR on this debt. By switching it to an interest-free balance transfer card you can reduce your monthly repayments and pay down the debt faster. 

Once you’ve found a suitable balance transfer card you can apply online and if you’re accepted you can ask the new provider to pay off the debt on your old credit card or cards, transfering the balance across to your new card – paying any balance transfer fees in the process. Typically you will have a window – such as 60 days – within which to make the balance transfers to your new card.

There are no limits on how many times you can transfer a credit card balance from lender to lender. But remember your credit score can be negatively affected when you apply for credit, so if you make a lot of applications in a short space of time this could impact on your ability to get the best balance transfer deals.  

An online balance transfer to a new card can usually be done within a few days. But transfer times will vary between providers due to their different procedures. In some cases it could take a couple of weeks.

There are lots of reasons why transferring credit card balances is a shrewd move. But it's only worthwhile if it helps you pay off your debt faster during the interest-free period, so you pay less overall – and provided you’ll still be saving money after any balance transfer fee is paid. 

If you need a credit card to continue spending, there are likely to be better alternative options.