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Credit card consolidation

Understanding debt consolidation using credit cards

Credit cards can be handy for dealing with your finances in a number of ways, one of which is helping you to consolidate your debt to make more manageable. Our guide explains more 


By Peter Carr

Published: 19 May 2021

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What is credit card debt consolidation?

Consolidating your existing debts into a single balance on a credit card is called consolidation.

It can help simplify your repayments and make your debts more manageable by giving you the flexibility of being able to choose how much to pay back each month (above the minimum required), often at lower or zero interest rates.

If you choose the right card it can also be cheaper than taking out a personal loan to do the same job.

Consolidating your existing debts into a single balance on a credit card is called consolidation, and with the right card it can be cheaper than taking out a personal loan to do the same job.

Using a credit card gives you the flexibility of being able to choose how much to pay back each month (above the minimum required).

Why should I consolidate my debt?

You may have more than one debt – such as outstanding balances on several credit cards – making it difficult to keep track of what you owe and when. You may also be paying high interest rates on one or more of the cards.

Consolidating what you owe onto one card with a lower interest rate (or even 0% interest rate for a limited period) could lower the amount you end up repaying and will also mean you have just one monthly payment to make. 

Remember, it’s always a good idea to pay more than the minimum required, so you clear your balance quicker and minimise any interest payments.

Using a balance transfer card to consolidate debt

balance transfer is the process of moving what you owe on one credit card to another credit card with better terms – giving you more time to pay off the debt at a lower, or even at 0%, interest rate.

Specialist balance transfer cards offer 0% interest on balance transfers for a promotional period, but it’s important to be aware of how long the interest-free period lasts (usually between 12-40 months). After this period, interest will be charged.

What is the cost of a balance transfer card?

When you move your existing debt to a balance transfer card your new provider will charge you a fee for doing so. The fee is usually a percentage of the amount you are looking to transfer.

For example, if you moved a balance of £1,000 to a new balance transfer card, and the balance transfer fee was 3%, you would be charged £30.

Balance transfer cards are cost effective providing you take advantage of the 0% interest period. It’s during this time that your repayments stretch further as you’re not paying interest on your balance and can clear your debt sooner.

But balance transfer cards can become expensive if you haven’t cleared your debt during the 0% interest-free period and you have to start paying interest on your remaining balance.

Our credit card calculator is a helpful tool which works out how long it’ll take you to pay off your balance based on your current repayments. It also can calculate how much you could save on interest payments by switching to a 0% balance transfer card.

What are the pros and cons of balance transfer cards?


  • All your debts in one place

  • One payment per month

  • Debt is more manageable

  • You could pay less interest

  • Credit rating could improve 


  • Transfer fees

  • APR and limit based on credit score

  • High interest rate (after interest-free offer)

  • Penalty charge if you miss payment

  • Interest rates could be high if you use it for spending

Do I need a good credit rating?

Yes. Although a balance transfer credit card might look enticing with a long interest-free period, you may not be able to get the best deal without a strong credit rating.

Lenders are only obliged to offer 51% of applicants their advertised promotional rate, so if your credit score is less than perfect you risk being offered a less competitive deal, or being declined for credit.

Your credit rating is a record of your financial history. Credit card or loan providers use it to assess how confident they are to lend to you, and the best balance transfer deals are reserved for those with a high credit score. 

You can check your credit score with Credit Monitor and also find ways to improve your credit score to access the best deals. 

What else should I watch out for?

Most credit cards that offer balance transfers will charge a relatively high interest rate for purchases. If you still need a card for buying things it’s wise to choose an alternative card that won’t charge you for spending. Alternatively if you want a low rate for balance transfers and also a low rate for new spending there are balance transfer and purchase cards available that offer both. 

Equally, make a note of when your 0% deal finishes. Once this period comes to an end your APR will shoot back up and you’ll have to start paying interest on your remaining balance. 

How else can I manage debt?

Consolidating your debt onto a balance transfer card is one way of tackling credit card debt, but here are a few more tips...

  • Pay more than the minimum monthly repayment. Our credit card calculator will show you how long it might take to pay off what you owe

  • Set-up a direct debit so you never miss a payment and avoid unnecessary fees

  • Consider whether a consolidation loan might be more suitable than another credit card

If you are struggling to repay your debt, don’t bury your head in the sand and try to forget about it. Rather than miss payments, contact your lender to see if you can agree a repayment plan.

There are also charities you can reach out to for help. Citizens Advice offers a full debt and consumer advice service. Find your nearest centre or call on 03444 111 444. StepChange and National Debtline are also options.

How can I find the best balance transfer credit cards?

Comparing balance transfer credit cards is quick and easy with MoneySuperMarket. Just tell us a few details that will be used for a "soft credit search" which you can see but lenders can't. 

We’ll then provide a list of cards that you are either pre-approved for or show you your chances of being eligible. 

You’ll be able to compare length of the 0% interest-free period and any fees for the transfer before making your final decision.

MoneySuperMarket is a credit broker not a lender. You must be 18 or over and a UK resident.


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