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Published 17 June 2024
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Balance Transfer Credit Cards

You can save on interest when you transfer your credit card debt to a balance transfer card – which means you could pay it off much faster. Read on to find out exactly how they work, and see our pick of the best balance transfer deals, whatever your credit score.

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If you currently pay interest on your credit card, you could save money and clear your debt more quickly by moving it to a balance transfer card. Many offer an introductory period where you’ll pay 0% interest for a specified time, from as little as a couple of months to over two years in some cases. You won’t be charged any interest if you clear the balance before the 0% period ends.

How do balance transfer cards work?

When you transfer your existing credit card debt to a balance transfer card, you’re effectively using one card to pay off another. However, the main benefit of a balance transfer card is that you can clear your balance more quickly and for less because you won’t be paying any interest on your new card. 

For example, if you owe £2,000 on a credit card that’s charging 25% interest, a sizeable chunk of your monthly payment will go towards the interest charges rather than clearing your balance. But if you move this debt to a balance transfer card that offers 0% interest for 24 months, for two years your entire monthly payment will go towards paying off your debt. 

However, it’s important to be aware that with many 0% cards, you will often need to pay some charges. Firstly, when you transfer your balance you can expect to be charged a fee of up to 5% – so if you transfer a balance of £2000, you will be charged up to £100. 

Most importantly, once the interest-free period is over, providers typically start to charge a much higher rate of interest. If you can, aim to pay off your debt before this happens. Alternatively, you could apply for a new balance transfer card and move your remaining balance over to a new 0% deal. 

The best 0% balance transfer cards

If you’ve never had a balance transfer card before, take some time to decide which one will best fit your personal circumstances.  As a rule, look for the card with the lowest APR (ideally 0%), the longest interest-free period, the lowest balance transfer fee, and a credit limit that’s high enough to accommodate your existing balance(s). 

The best balance transfer cards for bad credit 

Don’t assume you won’t be eligible for a balance transfer card just because you don’t have a high credit score. Although you might not be able to get the longest 0% deals, some providers still offer low or 0% interest cards if you have a poor or limited credit history. 

Before you sign on the dotted line, double check the APR once the introductory offer ends – if you don’t think you will be able to clear the balance in time, and the APR is higher than your existing card, it may not make sense to transfer your balance to a new card until your score improves and you’re eligible for a better deal. Alternatively, you could consider transferring only as much of your balance as you’re confident you can clear before the 0% offer expires. 

Advantages of balance transfer cards

The main advantages of taking out a balance transfer credit card are:

  • You can avoid paying interest on your credit card debt, or pay a lower rate of interest than on your current card, as long as you pay off the debt in full before the introductory low-interest rate ends.
  • You could clear your debt more quickly as you won’t be paying interest – so every penny of your monthly payment will reduce your balance. 
  • You can move debts from multiple credit cards onto one card, which could help you to streamline your repayments.
  • Your credit score could improve. As long as you don’t spend on your new card, your credit utilisation (the amount of available credit you are using) will improve as you will not only have more available credit but will also be paying down your balance without any additional interest. 

Disadvantages of balance transfer cards

Balance transfer cards also have some disadvantages, including:

  • You will often have to pay a balance transfer fee, which is charged at a percentage of the outstanding balance being switched.
  • After the 0% period ends, the interest rate on your balance transfer card will revert to the card’s standard rate. So if you don’t pay off your debt before then, you may need to pay high interest charges.
  • You may be charged interest if you use a balance transfer card for any other reason, such as making a purchase or withdrawing cash unless otherwise specified. Some cards will include 0% interest on purchases as well as the transfer, but this may be for a different period than the one offered for balance transfers.
  • Your credit score could temporarily drop. This is because each new application triggers a hard search which shows up on your credit report. 
  • You could make your financial situation worse. Unless you are confident that you can be disciplined enough not to spend on your new card – or start building up debt on the card that you have just cleared – a balance transfer card may not be the right decision for you. 

Am I eligible for a balance transfer card?

Although you will need a good credit score to be eligible for the best deals, there are also a number of balance transfer cards for bad credit. However, these often have a lower credit limit and a shorter introductory period, as well as a higher interest rate (APR) when the introductory period ends. Even if you’re not eligible for a 0% card, you may still be able to save money by transferring your existing balance to a new card with a lower APR. 

Before you apply for a balance transfer card, it’s important to do the following:

  • Check your eligibility: Basic eligibility criteria vary between providers, but generally, you need to be over 18, a UK resident with a permanent address, earning a minimum annual income, not declared bankrupt or have any recent individual voluntary agreements (IVAs) or County Court Judgements (CCJs). You can also use an eligibility checker via a provider or broker which will give you an idea of how likely you are to be offered the card you want. You may also be given an idea of your credit limit and APR. This is quick and easy to do and won’t show up on your credit report, so other lenders won’t be able to see any evidence of your search. 
  • Check your credit score: Your credit score is a three-digit number that helps lenders decide whether to offer you credit. Lots of factors can impact your credit score, such as missed or late payments, defaults or high use of credit. It’s important to check your credit score before you apply as this can reduce the risk of an unsuccessful application by allowing you to spot errors that need to be corrected, or take steps to improve your score. You can check your credit score for free with credit reference agencies like Experian and Equifax, or via platforms like ClearScore and Credit Karma

How to apply for a balance transfer card

Applying for a balance transfer card can usually be done online or in person at a branch of the relevant bank. The provider will run a credit check, so you will need to share some basic information including:

  • Your contact details. 
  • Your address (including all addresses for the last three years).
  • Your bank account details.
  • Your income.

If you apply online you might get an instant decision, but the approval process varies between lenders so you may have to wait a few days to find out if your application has been successful. 

Once approved the next step is to sign a credit agreement. If you apply online you can do this digitally, otherwise you will be sent paperwork to sign and return. At this stage, it’s important to check your credit limit, APR, any fees and charges and the minimum monthly payment as these might have changed since you applied. 

Don’t sign until you’re happy with everything, as you can walk away with no obligation. Even if you change your mind after you’ve signed, you have a 14-day cooling off period, which means you can cancel the agreement without giving a reason why – although you will need to repay any money you have borrowed, plus any applicable interest. 

If your application is unsuccessful, resist the temptation to try again straight away – each application will leave a mark on your credit report, which could give lenders the impression that you’re experiencing financial difficulties. 

Instead, check your credit report to see what you could do to improve your chances of being accepted next time, and use eligibility checkers before your next application to reduce the risk of being turned down again. 

How to transfer a balance 

When your new account is open, it’s a good idea to transfer your balance as soon as possible. Not only will this save money on interest, but some providers require that all transfers should be made within a limited time, typically 60 or 90 days from the date your card arrives. 

When you’re ready to transfer your balance, simply follow these three steps:

  1. Request the balance transfer from your new provider. In some cases, you will be able to do this online or via an app, or you may need to do it over the phone. You will need to give the account numbers of any cards that you would like to transfer and confirm the transfer amount. 
  2. Wait for the balance transfer to complete. In some cases, this may take a matter of minutes, but it could take several days or even weeks, depending on the provider. When the transfer is complete, you have the option to close your former amount as long as you have cleared the balance in full. 
  3. Pay off your debt. Don’t forget to keep up with at least the minimum monthly amount on your new card, or you risk losing the 0% deal and damaging your credit score. If the credit limit on your new card wasn’t high enough to cover the entire balance of your former card, don’t forget to keep making monthly payments on that one, too. 

How to use a balance transfer card

The following tips will help you to make the most of your balance transfer card.

1. Use your credit limit

You can usually transfer more than one balance to a balance transfer card, provided that you don’t exceed the upper limit on your card. This can be a helpful way to streamline your debts into one monthly payment, while also saving money on interest. 

Be aware that the balance transfer limit is often lower than your credit limit, typically around 93-95% of your credit limit. You can also expect to pay a balance transfer fee on each balance you transfer. This varies between providers but is usually around 3% or a minimum of £3. 

2. Decide which balance to transfer 

If you have more than one credit card balance, but your new credit limit isn’t high enough to transfer them all, it pays to think carefully about which balance to transfer. Check the interest rates on your existing cards to find out which one is costing you the most in interest. In most cases, it makes sense to transfer this balance first.

Alternatively, if there’s no real difference in interest rates, or you have two or three cards with low balances, you could streamline your monthly payments by transferring them all to one balance transfer card. However, there is usually a minimum transfer amount, which is typically £100. Also bear in mind that you’re not usually able to transfer between cards from the same provider or group. 

3. Make at least your minimum payment

When you’re not using your card to make purchases it can be easy to forget that you still need to make your monthly payment. This is easy to overlook if you’re aiming to earn extra interest through stoozing, or if you still have an outstanding balance to repay on your original credit card. For this reason, it’s sensible to set up a direct debit to ensure that your payment is made on time. This will protect your credit rating – and you won’t have to worry about your 0% deal being withdrawn due to late payments. 

4. Don’t make purchases or withdraw cash on your new card 

As balance transfer cards are designed to help you clear existing balances, it can be expensive to use them for purchases or cash advances. This is because the 0% interest rate is unlikely to apply to new purchases or withdrawals, making it a costly way to borrow. 

5. Clear your debt before the 0% period ends 

Once the promotional period ends, you will start paying interest on your balance. For this reason, try to clear your debt before this time. You might find it helpful to divide the amount you owe by the number of months that the interest-free deal lasts, as this will indicate how much you would need to pay each month to pay it off. For example, if you owe £2,000 and have 0% interest for 24 months, you would need to pay just under £83.34 per month to clear your debt in full before the promotional deal ends. 

Alternatively, you could apply for a new balance transfer card and transfer the outstanding balance onto a new card so that you can avoid paying interest for a longer period of time. 

Is a balance transfer card right for me?

Applying for a balance transfer card can be a good way to consolidate your credit card debt and pay it off more quickly, but it might not be the best option for you. 

Even if you’re on a solid financial footing, a new credit application will leave a mark on your credit score, which is something to consider if you plan on making a mortgage application in the near future. However, this change should only be temporary and, in the long term, your score should improve as you pay off your debt. 

If you’re already struggling financially, you may be tempted to spend on your original card after you have transferred the balance – or use your new card to make new purchases. As a result, you could quickly end up owing even more. 

In this situation, it’s important to consider all your options, including seeking free debt help from charities such as: 

Balance transfer credit card frequently asked questions

What happens to your old credit card after a balance transfer?

There are several factors to consider in this situation, and it also depends on whether you have cleared the balance in full. 

If you have paid the card off in full, you can decide whether to close the account or keep it open. Bear in mind that closing the account may temporarily affect your credit score because it will increase your credit utilisation (the amount of available credit that you are using). Lenders also like to see a history of well managed and long-held accounts However, keeping the account open if you don’t use the card, and seldom check your account, could leave you more vulnerable to fraud as you may not spot any fraudulent transactions. 

If you haven’t cleared the balance in full, it’s important to keep making at least your minimum monthly payment, so that you don’t fall into arrears and damage your credit score.

Can I transfer someone else’s balance to my card?

There may be a time when you want to transfer someone else’s debt to your card to take advantage of a lower interest rate, which they may not otherwise be able to access. This is sometimes possible, and many card providers allow balances to be transferred between partners and dependants.

But, while transferring someone else’s balance to your card can greatly improve family finances, remember that in doing so you become responsible for paying off their debt. So always think carefully about the consequences.

How long can a credit card balance transfer take?

It depends on the provider. It could be completed on the same day, but it could take several days to arrive in your account. Your card provider will give you more information on expected timeframes when you set up the transfer.

Can a credit balance transfer hurt my credit score?

When you borrow money or take out credit it leaves a mark on your credit report which can cause your score to drop temporarily. Assuming you pay down your balance and reduce your debt, your score should recover quickly. 

However, it’s best to avoid applying for several credit cards in a short time period, as this will have a greater impact on your credit score.

How much balance can I transfer?

This depends on your credit limit and provider. There’s usually a minimum transfer, typically £100, and a maximum limit, which is around 90-95% of your credit limit, to leave some room for any extra charges. Check your terms and conditions, or ask your provider if you’re unsure.

What is the longest 0% balance transfer credit card?

Tesco Bank offers a Balance Transfer Credit Card with 29 months at 0% as at 14 June 2024. 

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