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What is a balance transfer?

Balance transfer credit cards explained

published: 17 August 2022
Read time: 5 minutes

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

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.  

The balance transfer card will typically have a very low or zero per cent interest charge on the transferred debt for a set period of time, such as 12 months. This gives you time to pay off what you owe without the interest building up.  

Balance transfer cards in the UK can 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 it 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. 

This video information is available as a text transcript.

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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 even 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 offer term 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.  How it works:  

  1. You’ve got a £2,000 outstanding debt on a credit card, for example, with an interest rate of 18.9%.  

  2. 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).  

  3. 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.   

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:  

Deciding 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 also your chances of being accepted for the card if you apply – 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 fee is charged as a percentage of the amount you transfer, typically between 1.5% and 3% of your card balance.    

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 then moving the debt to a low or 0% interest balance transfer card can mean big savings in interest repayments – so 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 one card so they’re easier to track. 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 cardis 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 period or a low interest rate. 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 

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. 

How long does a balance transfer take? 

A balance transfer generally takes around five to seven days in the UK, but some credit card providers can take longer – even up to three weeks. 

It is not instantaneous because your new card issuer has to coordinate the transfer with your old lender, and depending on the different processes it may take a few days to be signed off and completed. 

What is a balance transfer fee? 

A balance transfer fee is a one-off charge you’ll 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

Is a balance transfer card right for me? 

A balance transfer card could be right for you if it helps you to clear your outstanding debts on other credit cards without paying as much interest. They are best suited to customers who can be disciplined enough to clear what they owe within the promotional low interest of 0% period and won’t be tempted to use the balance transfer card for spending.  

Other useful guides 

Want to find out more about credit cards? Have a look at some of our other guides here… 

Credit cards explained: understanding the basics 

What is a credit limit? 
How to increase your chances of being accepted for a credit card 

Compare balance transfer cards with MoneySuperMarket 

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 that we'll show you products offered by lenders. You must be 18 or over and a UK resident. 

Frequently asked questions

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. 

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, 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. 

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