Choosing a balance transfer credit card
Written by Robert Bester, Consumer Finance Expert Robert has been a writer for six years, specialising in consumer finance and the UK lending market. Concentrating on consumer credit products, Robert writes informative articles that help customers manage their personal finances efficiently.
18th January 2021
4 minute read
When getting a balance transfer credit card it’s important to understand the different deals that are currently on offer, so you can go into the application process with a clear idea of what you would like.
If it’s managed correctly, a balance transfer card can help you consolidate your debts, save money on interest and cut down the amount of time you spend repaying your debts. Not to mention the positive impact it can have on your credit file by making monthly repayments.
We’ve put together a short guide on how to tackle choosing a balance transfer card, and what you should be looking out for prior to hitting submit on that application.
Follow the Guru’s advice and soon enough you’ll find yourself with a brand new balance transfer card and an easier way to repay your debts. You might even find yourself growing a particularly luscious moustache, which can be a little disconcerting to begin with, until you realise how lonely your nose was all this time.
What is a balance transfer card?
A balance transfer credit card is a financial product that allows you to transfer debt from one or more credit or store cards to another in order to save money on interest. Balance transfer credit cards are also a good way of consolidating debt and making it easier to manage your finances.
There are currently two types of balance transfer promotions; one that offers an introductory 0% interest period and one that offers no transfer fees:
- 0% interest period – when you open this balance transfer card, you will have a certain period of 0% interest, which means you won’t accrue any further charges on transferred funds. The initial period can last from between 6 and 29 months, giving you plenty of time to pay off the balance in full, though the actual transfers will need to be made within a period of around 60-90 days, depending on the deal
- No transfer fee - having no transfer fee means that every time you make a balance transfer you won’t have to pay anything else on top in the way of fees. This promotion can actually coincide with a shorter 0% interest period, so as long as you make your transfers within the
Whilst these promotions can overlap, if you have both a 0% interest period and no transfer fees, the 0% will last for less time. Ideally you should be aiming to pay off the outstanding balance by the time this introductory period comes to an end, so think about that when choosing your preferred balance transfer card.
To get an idea of what Balance Transfer cards are available now, have a browse through some options here.
How do balance transfers work?
Balance transfers work by transferring an outstanding debt from one credit or store card to another, usually to save money on interest. The debt from the original card (or cards if transferring several debts) is now cleared, but you now owe the total balance to the new lender of the balance transfer card.
The only restriction to a balance transfer is that you can only make a balance transfer if it is with a different provider. For example, you couldn’t transfer a debt you already had on a Virgin credit card to a new Virgin balance transfer card.
The process of transferring one or several credit or store card debts to a balance transfer credit card is relatively simple:
- Add up your total debt
- Calculate roughly how long it would take you to pay off
- Use an eligibility checker to see how likely you are to be accepted for a card.
- Check if your credit score is good enough
- If you’re eligible, apply for a card that matches your requirements
- Transfer all of your outstanding balances within the transfer period (usually 60-90 days)
- Make repayments to the new lender on time
- Decide what to do with your old cards (ideally, keep them open with a zero balance)
By following the steps above, you will be able to quickly and easily consolidate your debts, meaning it will be much easier to make repayments each month as it will just be one payment instead of multiple.
Comparing balance transfer cards
There are a wide range of balance transfer cards to choose from, giving you a great deal of flexibility when it comes to choosing your perfect match. Your personal circumstances will have a lot to do with the balance transfer card you decide to go for, so consider the following before making an application:
How long will it take me to clear the balance?
If your balance is quite large, then you’ll probably want more time to clear the debt. Find the balance transfer credit card that offers the longest interest free period so you have longer to pay the balance off in time.
Can I afford the repayments?
As much as a balance transfer card will make repaying a little easier, it won’t stop it completely. Therefore, it’s worth finding out how much you can spare every month to go towards repayment. You can confirm the minimum monthly repayment from reading the summary box document, but if you only pay the minimum every month you probably won’t pay it off in time.
Am I willing to pay fees?
Most balance transfer cards have an initial transfer fee and some also carry an annual fee. Make sure you are aware of any fees before applying for the card and weigh up the cost of any potential transfers you will make with other rates.
How much do I need to transfer?
You won’t know how much the lender will offer you in terms of a credit limit until you are approved for the card, so look at cards that promote credit limits higher than the amount you actually need.
How likely am I to be accepted?
Lenders will carry out a credit check before offering you a balance transfer card, but this can harm your credit rating if you’re rejected. Use our moneymatcher eligibility calculator before you apply to see how likely you are to be accepted for the card before making an application.
Ready to choose your balance transfer card?
Are you ready to start choosing your balance transfer credit card? If you still need some help to find your perfect card, try our free moneymatcher comparison tool. This free eligibility calculator will deliver tailored results using a few personal details from yourself, all without affecting your credit score.
Head over to our Balance Transfer Credit Cards page to view the full list of cards that are available. You can also read more guides on balance transfer cards and check out our FAQ section to find out more information before you apply.