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Balance transfer credit cards
Save on interest with a 0% balance transfer card
What are balance transfer credit cards?
If you're paying a high interest rate on existing credit card debts, it may be cheaper to transfer some or all of your borrowing to a card where you don't pay any interest for a set period of time.
This gives you a chance to pay off your debt, saving you a significant sum of money.
These types of credit cards are called balance transfer credit cards.
How do balance transfer credit cards work?
When you move to the new 0% balance transfer card, your credit card debt will be interest free for a set period of time - often up to two years or more. After that, the interest rate (known as the APR) will revert to a higher rate.
During the 0% interest period you can pay off your credit card debt in regular instalments.
By transferring over your old credit card, or store card balance to a new card you will have some financial breathing space.
There's often a charge for this - you may pay a fee based on a percentage of the value of the debt you have transferred across.
Fee-free balance transfer cards tend to offer shorter 0% periods."
Source: Defaqto and Uswitch data - correct as of 19 December, 2022
How to compare balance transfer cards
Balance transfer period
The 0% interest period is the most impart aspect of a balance transfer card, as this determines who long you'll have to pay off your balance without paying any interest. The longer it is, the lower our monthly instalments can be to pay off the balance.
Balance transfer fee
There many cards that don't charge a few for transferring your balance. Typically, for the the cards with the longest 0% periods, you'll likely have to pay a fee. Usually it ranges between 1% and 4% of amount transferred.
APR
The APR is is the interest rate you'll be charged once the interest free period ends. If you intend to keep using your card after the 0% period ends, ideally you want to get a card with lowest APR you can be approved for.
Watch: How do balance transfer credit cards work?
What does a 0% balance transfer offer cover?
A credit card might offer a 0% balance transfer rate that lasts years. But it might only offer a few months of interest free spending.
Generally, it’s better to have your balance transfer credit card just for balance transfers. But it’s worth knowing what rates you’ll be paying for spending on it too, just in case you need to.
If you have a large debt to pay, try to avoid spending on the card after transferring a balance to it.
Or if you're looking for a card that offers a good rate on both, you might want to consider a 0% balance transfer and purchase credit card.
Is it worth having a 0% balance transfer card?
A 0% balance transfer credit card can be a useful for:
Reducing your monthly outgoings
Manage all of your credit card borrowing
Transfer debt from existing credit cards with 0% introductory deal
You can pay off your debt over a longer period, without worrying about paying extra in interest repayments.
This can be a good way to save money on the cost of paying back your credit card debt, as you can pay down the balance without paying the interest charges.
Make sure you check when the 0% offer ends
0% balance transfer offers do not last forever
When the introductory offer ends, the interest will go back to a more expensive standard rate
When you transfer your credit card balance to a new card, always make a note of when the introductory 0% interest rate ends
You may wish to consider moving any outstanding balance to a new balance transfer card, that way you can pay it off without costly interest payments
It's important to have a plan to repay the balance, so don't lose money on interest."
Balance transfer FAQs
What is the APR?
APR is there to help you compare credit card deals more easily. APR stands for annual percentage rate.
It helps you work out what the credit card will cost you once your 0% introductory period ends. A higher APR means higher repayments.
APR takes into account the interest rate and standard additional fees associated with the credit card offer.
Could I get a shorter introductory period than advertised?
Be careful. Where you’ve had credit problems in the past you might be given a shorter introductory period than you see advertised which may not make the offer as attractive. If your credit rating is lower, you may be offered a less attractive deal. For this reason, it is a good idea to get your credit rating into the best shape possible.
What is the true cost of the balance transfer fee?
Most credit card providers charge a balance transfer fee of around 3% when you move your debt from one card to another. This varies between cards and providers.
As the fee is worked out as a percentage, the cost of the transfer fee will rise with the amount you transfer.
For example
You transfer £1,000. The transfer fee is 3%.
It'll cost you £30 to transfer your balance.
You transfer £2,000. The transfer fee is 3%.
It'll cost you £60 to transfer your balance.
But do not let the fee put you off. Even with the fee, you’re still likely to be paying less overall compared to your existing credit card.
Some credit cards will offer a discount on the initial balance transfer fee provided you meet their terms and conditions. This usually includes paying off your balance on time each month.
Could I get a higher APR than advertised?
The rate you see advertised isn’t necessarily the rate you will get. Credit card providers only have to give the typical APR they advertise to 51% of successful applicants. If you don’t have a good credit score, you might be given a higher APR.
Check that the rate you see advertised is the rate you will actually get to avoid a shock when your first statement arrives. Again, getting your credit rating into good shape will help your chances of getting the best deals.
Are money transfers included?
Some balance transfer credit cards will also include 0% on money transfers.
Money transfers allow you to pay money from your balance transfer cards into your current account. So you can pay off overdraft debt, not just credit card debt.
These deals will also come with a fee, usually around 4%, but this will vary from provider to provider. Check what the fees involved may include as this could make your money transfer very expensive.
These balance and money transfer credit cards can be vital for consolidating debt from a variety of areas. It could be worth considering if you have debt elsewhere and not just from your credit card.
Finding the best balance transfer cards
The best balance transfer credit card for you will depend on your needs. But to help you find the best deal you should look for:
Lowest APRs
0 balance transfer fees
Longest 0% introductory periods
Also consider what other features you might need including:
Money transfers
0% purchases
Can I get a balance transfer credit card with bad credit?
Your options for balance transfer credit cards will be limited if you have bad credit. Most credit cards transfer deals will only accept people with a good or excellent credit rating.
You might have a higher chance of being approved for a credit card for bad credit.
What does 'most popular' mean?
When we use the term ‘most popular or ‘popularity’ on Uswitch in reference to credit cards, these cards are ranked by the number of clicks they have received on the site in the past 48 hours.
The most clicked on cards are at the top, with the least at the bottom. This reflects how popular they are with visitors to Uswitch.com. Consequently, this is a good table to look at if you’re interested in seeing which cards most people think are worth getting.
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