Should you transfer your credit card balance?

Balance transfers can help you to lower the cost of your credit card borrowing and consolidate multiple debts.

What is a balance transfer?

Transferring your balance means moving all or part of a debt from one credit card to another.

People often use them to take advantage of lower – sometimes 0% – interest rates.

Switching to a card with a lower interest rate lets you:

  • pay less interest on what you currently owe (but you’ll usually pay a fee)
  • organise your finances by consolidating multiple monthly payments into one.

What is a money transfer?

A money transfer is like a balance transfer, but instead of the money going from one credit card to another, the money from the credit card goes into your chosen current account.

This allows you to pay off an overdraft, or cover an essential or unexpected bill using a credit card, which might charge you a lower interest rate. 

How to transfer a balance

When you apply for a new low or zero-interest credit card, you’re given the opportunity to transfer any other balances on other cards at that point. Or you can contact your credit card provider to arrange a transfer.

You’ll need:

  • the details of the card you want to transfer
  • the card number and the provider
  • the balance you want to transfer.

You might be able to do this online.

How much it costs

Credit card companies usually charge a fee for balance and money transfers. This is often around 2-4% of the amount you’re transferring, which will be added to your outstanding balance.

Make sure you check the fee and take this into account when calculating potential savings, especially if the 0% promotional period is quite short.

Things to watch out for

  • Interest rates — most balance transfers offer a better interest rate (often 0%) for an introductory period. When that period ends, the interest rate will go up. So it’s important that you know when it finishes. Check how well the final rate compares with other cards, and see if you can get a better deal elsewhere.
  • Check transfer limits — check with your credit provider what limits might exist. 
  • Be aware that if you spend using your balance transfer credit card, the purchases you make might not be included in the 0% rate.
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MoneyHelper is the new, easy way to get clear, free,
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Whatever your circumstances or plans, move forward with MoneyHelper.

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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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