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Should I transfer my credit card balance

Should I transfer my credit card balance image

A balance transfer credit card is a good option for those of us who want to avoid hefty interest rates on existing credit cards or consolidate several credit cards or store cards into one simple monthly repayment.

Balance transfer credit cards also offer 0% interest rates, giving you some breathing space to clear the balance and save money.

It also makes managing your finances easier - if you consolidate all of your credit and store card debts on to the one card, you’ll only need to make a single monthly repayment, rather than juggle several payments to multiple different lenders.

Should I use a balance transfer card?

If the interest rates on your current credit or store cards are making the repayments difficult or causing financial hardship, then transferring all of your existing balances to one interest free card can save you money and give you better control over your finances.

Balance transfer cards differ from credit cards as they offer the opportunity to take advantage of an interest free period to help clear the debt, whereas credit cards come with an agreed interest rate.

With a little planning and by using a balance transfer card in the right way, you can clear your balance without paying the high interest rates of standard credit or store cards.

The interest free period can vary from card to card and will also be affected by your credit score and personal circumstances. It’s best to do some research before applying for a balance transfer credit card but you’ll also need to make sure that you can clear the debt before the end of the interest free period.

Balance transfer credit cards are also a really useful financial tool for those of us that occasionally forget to make repayments on several credit card balances, therefore attracting a late payment charge.

A balance transfer card allows you to transfer several outstanding balances so you just have the one repayment to make each month, rather than having to repay several credit cards at different times of the month.

Compare balance transfer cards

Can you transfer a balance from someone else’s credit card?

Yes, it is possible to transfer a balance from someone else’s credit card onto your balance transfer card, but you will be responsible for making the payments from the date of the transfer.

Transferring a balance form someone else’s credit card is a good way of saving money on interest, but it does come with risks:

  1. From the moment the debt is transferred on to your card you are legally responsible for the repayments, so make sure that you are happy with this arrangement or have an agreement in place for the other person to repay you on a regular basis.
  2. If the person who’s balance you transferred to your card misses a payment or fails to repay the balance altogether, it is you who will be charged for late repayments, not them.
  3. Should repayments not be made, it is your credit score that will be negatively affected.
  4. Once the interest free period ends, and if the balance hasn’t been paid in full, you will need to ask the other person to cover the additional interest on the balance or pay it yourself.

See if you're eligible for a balance transfer card

So, if you are considering transferring a balance from someone else’s credit card, make sure that you can trust them to make the repayments and if possible, detail the balance, date and repayment schedule in writing and ask them to sign it.

Can you transfer money from a credit card to a bank account?

If you need to transfer money from a credit card to a bank account then you’ll need a money transfer card to be able to avoid hefty charges and fees.

Transferring from a credit card to a bank account is one of the most expensive ways of borrowing money, and therefore should be avoided wherever possible. Drawing cash from a credit card is known as a ‘cash advance’ and your lender will charge you a daily fee of around 2 to 3% on the amount until you pay back the sum of money you have withdrawn.

Instead, it is advisable to get a money transfer credit card as many lenders offer a 0% interest rate for a set period and you can transfer the amount you need directly to your bank account to pay off loans, cover an overdraft or just pay for day-to-day expenses.

Again, don’t be tempted to draw the funds out as cash to deposit in your bank later. If you do need to access the money, then transfer it into your current account and simply withdraw it from there so you won’t attract charges or fees.

Can you transfer a loan to a balance transfer credit card?

You can transfer a loan to a balance transfer credit card if you wish, but this can be complicated and attract fees. Instead, money transfer cards offer a far simpler and cheaper alternative to transferring a loan to a balance transfer credit card.

Balance transfer credit cards work best when credit and store card balances are transferred as they offer interest free credit periods and most often the new lender will arrange all of the transfers on your behalf.

When transferring a loan, money transfer cards are a far better alternative as they allow you to deposit the funds to cover the loan amount directly into your bank account and still (in most cases) offer a 0% interest period.

How much can I transfer to a balance transfer credit card?

How much you can transfer to a balance transfer card depends on the credit limit assigned to you when the lender offered you the card and varies from person to person. Some lenders only allow cardholders to transfer a balance equivalent to a percentage of their credit limit (normally 90 to 95%), so you’ll need to check how much of your credit limit you have available before making the transfer.