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Balance Transfer cards vs Money Transfer cards

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When looking for a new credit card, it’s worth understanding the differences between certain types, such as a balance transfer card and money transfer card, so you that you’re definitely getting the right credit card for you.

Below we’ve put together a short guide on the differences between the two cards and how they can both help with streamlining your monthly payments. You will, more often than not, need one or the other but not both, which means it’s important to understand the difference between them.

It’s like understanding the difference between beard oil and extra virgin olive oil. A very similar product but used in very different ways. The Guru won’t be making that mistake for a second time.

What is the difference between a balance transfer credit card and a money transfer credit card?

A balance transfer card allows you to transfer one debt (or part of the debt amount) to another provider. This normally allows you to save money on interest rates or consolidate several existing balances in one place, turning the outstanding debt into one payment instead of multiple.

On the other hand, a money transfer card allows you to transfer funds straight into your current account to cover other expenses, such as your overdraft. Some money transfer cards offer 0% interest on the cash transferred for an agreed period of time, although others will charge a fee from day one.

The discrepancy between the two cards will allow you to choose the one that will suit your needs the best, without getting stuck with a card that is incompatible with your finances. Read on to find out why you might need a balance transfer credit card or a money transfer card.

When would I use a 0% balance transfer card?

Balance transfer cards are a good solution for those who wish to transfer existing debt to a lower or interest free card for a fixed period in order to clear the balance.

Balance transfer cards are also useful for consolidating several debts onto one card to save money on high interest rates and take better control over finances as there is then only the one monthly repayment instead of several to keep track of. They normally come with a 0% interest period so you know exactly how long you have to pay off the overall debt.

This gives you greater control over your finances and helps them to keep track of their repayments far more easily than having several outstanding balances with different lenders to juggle every month.

The following steps will help you to decide which lender offers the best deal based on your own personal circumstances:

  1. Make a record of all the outstanding balances you wish to clear and note down the interest rates of each and every one
  2. Check your credit rating by applying for a credit report
  3. Use our moneymatcher eligibility calculator to check the likelihood of being accepted for the card you have chosen
  4. Check you are happy with the interest free period as these can vary and ensure that you can afford the repayments otherwise you could end up with greater financial pressure than before
  5. Apply for the card online or via phone
  6. Once accepted, make the repayments on time and clear the balance within the interest free period to make the most of the balance transfer

It’s wise not to use your balance transfer credit cards for spending or withdrawing cash as this will increase your balance and reduce the likelihood of you clearing the debt before the interest free period ends.

Read our guide on choosing a balance transfer credit card, or find out the 8 golden rules of a balance transfer card if you’re thinking of submitting an application.

When would I use a money transfer credit card?

Money transfer credit cards are a good option for anyone looking to reduce the amount of interest being paid on existing loans and overdrafts.

If the amount of interest you are paying on your loans and overdrafts is becoming unmanageable and leading to financial difficulties, then now is the ideal time to start searching for an interest free money transfer credit card.

If you are considering applying for a money transfer card, then the following steps will help you to decide which lender offers the best deal based on your own personal circumstances.

  1. Make a record of all loans and overdraft amounts you wish to clear with the card and note down the interest rates being paid currently
  2. Use an eligibility and comparison tool to find the best deal for you
  3. Check you are happy with the interest free period on offer (and note down when it ends). Do your sums again to be certain that you can afford the repayments
  4. Apply for the card online or via phone if the results from the eligibility calculator look good
  5. Once your application has been accepted, commit to making the monthly repayments on time (or early) and have a budget in place to clear the balance within the interest free period

What is the best credit card for me?

Whilst a money transfer card is useful for topping up an existing current account overdraft or other debt, it might not be suitable for paying off multiple debts at the same time. On the other hand, a balance transfer card can take on multiple debts and organise them better so you only have one payment to make every month.

Whichever you decide, both cards have got their advantages and might be preferable over the other, depending on your circumstances. Check your eligibility for a balance transfer card using our free moneymatcher comparison tool, which will highlight the most appropriate cards for you, without affecting your credit score.

Robert Bester - Content Writer

Updated on 3rd June 2019