Balance transfer credit cards explained
Balance transfer cards help you manage your money by moving debts to a lower interest rate. Our guide explains how balance transfer cards work and what to watch out for
Key takeaways
A balance transfer credit card allows you to move an outstanding balance from one or more existing credit cards to a new card
Compare credit cards to find the best deal and look for a 0% balance transfer period that suits your repayment timeline
Transferring a balance can temporarily affect your credit score due to changes in credit utilisation
Be aware of one-time transfer fees (usually a percentage of the balance) and focus on paying off the debt promptly
What is a credit card balance transfer?
At its simplest, a credit balance transfer is when a credit card holder moves their existing balance to another credit card from an alternative provider.
Typically you may want to carry out a balance transfer for these reasons..
So you can keep all your borrowing in one place
To take advantage of a low rate, which could help you clear your balance
What is a balance transfer credit card?
A balance transfer credit card is a special type of credit card designed to receive an outstanding balance transferred from one or more other credit cards.
A balance transfer card will typically have a very low or 0% interest charge on the transferred debt for a set period of time, typically 12 months. This gives you time to pay off what you owe without the interest building up.
Balance transfer cards in the UK allow you to consolidate multiple debts so you only have one monthly repayment to make.
In some cases, the most competitive deals may offer 0% interest on transferred balances for up to almost three years.
While transferring and consolidating your debts in this way can be an effective way to manage credit card repayments, there are some things to consider before you decide to get a balance transfer card.
These include a one-off fee for transferring a balance, which we’ll look at in more detail below.
This video information is available as a text transcript.
What do I need to consider before transferring a balance?
There are a number of things to consider before you apply for a balance transfer credit card. These include:
Decide how long you’ll need to pay off your credit card. You can work this out by dividing your balance by the amount you can afford to repay each month. For example, if you have a £2,000 debt and can afford £100 per month, it will take 20 months to clear (assuming your card offered 0% for 20 months or more).
Shop around for the best deal for you. Searching and comparing credit cards with MoneySuperMarket helps you find the best deal for you. Look for cards with a 0% balance transfer period that is long enough for you to repay your existing card debts in full. You can see any transfer fees and your chances of being accepted for the card – all without affecting your credit score.
Check balance transfer fees. Most balance transfer cards, particularly those with the longest zero per cent interest periods, tend to charge a fee. This is calculated as a percentage of the amount you transfer, typically between 3% and 5% of your card balance.
How do balance transfer credit cards work?
Balance transfers work by shifting debt from one credit card to another. The balance of your old card is paid off by your new card, effectively swapping who you have to repay.
Balance transfer cards will usually offer a promotional period where you’ll be charged a low or 0% interest rate on your card balance for a number of months.
At the end of this period the interest rate will usually jump to a much higher standard rate or APR.
If you haven’t cleared the card balance by the end of this introductory period, you’ll have to start paying interest again on the debt – or you could look to transfer to another balance transfer card.
Also note that credit card providers often charge a one-off fee for the balance transfer, such as 3% of the balance, for example.
Here's how it works:
You’ve got a £2,000 outstanding debt on a credit card, for example, with an interest rate of 18.9%.
You transfer the debt to a new balance transfer card offering 0% interest for 24 months, paying a one-off fee of £60 (3% of the transferred balance).
You’ll need to pay £85 a month to clear the £2,000 balance within the 24-month offer period. You must at least always pay the minimum monthly repayment on the card. The total interest saving – compared to the original credit card – would be more than £400, even after the £60 card transfer fee had been paid.
How long does a balance transfer take?
There is no set period, but you can generally expect a balance transfer in the UK to be completed in around five to seven days – although some credit card providers can take a few weeks.
It relies on the speed of the processes of your old and new credit card issuers to ensure the balance is moved efficiently.
What are the pros and cons of a balance transfer card?
Advantages of a balance transfer card
Clear debt faster. If you have an outstanding balance on one or more credit cards, moving the debt to a low or 0% interest balance transfer card can mean big savings in interest repayments. That means you can get rid of the debt quicker
Consolidate debts so they’re easier to manage. A balance transfer card allows you to bring balances from other credit cards together onto a single card. When you do this, you’ll only have one monthly repayment to make, so it’s easier to manage
Help your credit score. While getting a balance transfer card won’t immediately help build your credit score, it can help you take charge of your finances and reduces the chance of missed or late payments on other debts where you owe high levels of interest. Over time, this could help boost your credit rating
Disadvantages of a balance transfer card
Temptation to spend on it. While a balance transfer card is designed to help you clear debt at low or 0% interest, if you use it for spending you may face high interest charges. If this is likely to be the case, you may be better off considering a combined balance transfer and purchase credit card instead
Not clearing the debt quickly enough. If you don’t clear the debt within the initial 0% interest period you could face a hike in interest payments. These could be even higher than the APR you were paying before you got the balance transfer card
Depends on your credit rating. While an advertised 0% introductory period for 24 months might look appealing, the best deals are reserved for those with excellent credit scores. If you have a bad credit score, you might find they are out of reach – or you’ll be offered a shorter 0% interest or a low interest rate period. So while it may not mean you can’t get a balance transfer card, the amount you might be able to save could be less
Will transferring a credit card balance affect my credit score?
Transferring a credit card balance could affect your credit score simply because any change in your credit use can affect your credit score.
However, this impact is likely to only be temporary and if the balance transfer helps you to manage your finances better, clear your debt faster and not miss any repayments, then over time it should give your credit rating a boost.
What is a 0% interest balance transfer?
A 0% interest balance transfer is when you move what you owe from one credit card to a dedicated balance transfer credit card without having to pay any interest for a fixed period.
The best 0% card deals for balance transfer credit cards can offer 0% interest for up to 36 months, but there are a few things to watch out for.
You are likely to have to pay a one-off transfer fee, which could be a percentage of the balance you wish to shift. You should also only use the card to pay off what you owe as quickly as possible.
If you use it for any other reason, you may find you incur high interest charges. Look to try and clear the debt fully before the interest-free period ends. Otherwise, you’ll also face high interest rate charges on the balance.
What fees are associated with transferring a balance?
A balance transfer fee is a one-off charge you’ll usually have to pay to switch a balance. It’s usually a percentage of the amount of debt that you transfer – the typical fee is around 3%, with a minimum charge of about £3.
If you transferred a debt of £1,200, then 3% of this would mean you would pay a £36 fee. Some transfer cards charge lower fees or in some cases no fee, but often have a shorter 0% interest period.
Most credit card providers require you to transfer 90-95% of the credit limit on your card. This is because providers don’t want you to have debts with other cards or spread yourself too thin and become unable to pay off the card.
As an alternative, you could apply for a card that doesn’t charge a fee but offers a shorter period at 0% interest or a low rate of interest. This could be preferable if you only have a small debt balance to transfer and pay off.
To get the longest 0% interest period balance transfer deals, you’ll usually need to have a solid credit history and good to excellent credit score.
Our credit card calculator can help you work out how long it will take to pay off an existing balance based on your current monthly repayments and APR.
Other useful guides
Want to find out more about credit cards? Have a look at some of our other guides here
Compare balance transfer cards with MoneySuperMarket
A balance transfer card isn't right for everyone. But they're a good bet if you're keen to clear your outstanding credit card debts while minimising what you pay in interest.
If you do decide a balance transfer card is what you're looking for, the good news is that comparing balance transfer credit cards with us is quick and simple.
Just give us a few details about you and your finances and we’ll search across the market to find the best deals to suit your needs.
We’ll also show you your chances of being accepted for different cards so you can make a confident decision before applying. Searching in this way doesn’t affect your credit score in any way.
MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead, we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.
Can I use my old credit cards after a balance transfer?
Once you’ve transferred your card debt, you may wonder if it’s better to stop using your original card for any further spending – or even close the card account down.
But while it may be sensible to remove the temptation to spend again on the card, closing it straight away could actually harm your credit score. This is because it could increase your debt-to-credit ratio.
If you want to carry on using your credit card some lenders allow a ‘same day balance transfer’ and will allow you to use your credit card on the same day you transfer the balance.
Often, providers will allow this if they get your transfer request before 5pm. But make sure you check this, as it can vary depending on when your previous provider processes the payment.
If you’ll want to continue spending, you could look for a combined balance transfer and purchase credit card, These cards typically offer an interest-free or low interest rate for balance transfers AND a zero or low interest rate on new spending for a set time.
Should I cancel my credit card after I have transferred its balance?
You may wish to cancel your credit card after you have transferred the balance, particularly as it removes the temptation to use it for more spending.
Alternatively, you might prefer to keep the credit card for emergency spending and because it helps lower your credit utilisation rate (the proportion of credit you are using at any given time), which can reflect positively on your credit score.
When is the best time to do a balance transfer?
When you should do a balance transfer will depend on your situation. If you have a large credit card balance and you’re facing high interest rates and struggling to pay off your debt, it usually makes sense to transfer as soon as possible.
If you’ve bought a high-value item, like a new car or kitchen, you may want to switch your balance to a 0% interest rate to take advantage of an interest-free card deal.
Just remember to factor in any potential transfer fees that come with transferring your balance.
Can I get a balance transfer card with poor credit?
You might be able to get a balance transfer card with poor credit, but you may not be offered a low or 0% introductory interest rate and your card limit is also likely to be low. It may be worth taking steps to try to improve your credit score before applying for a new credit card.
What is the maximum amount I can transfer?
This will depend on the card limit given to you by the card issuer when they approve your application. If the card limit is lower than the outstanding balances on your existing credit cards, you may not be able to switch all the debt to the new balance transfer card. If this is the case, prioritise moving the most expensive debt first.
What is the difference between a balance transfer card and a regular credit card?
Unlike a regular credit card that is designed for making purchases, a balance transfer card is designed to accept debt from your other credit cards to give you time to pay it off at a lower or zero interest rate.
Can I transfer a balance from more than one credit card?
Yes, you can transfer the balance from one or more credit cards to your new balance transfer card. However, you will be limited by the credit limit on your balance transfer card.
