Balance Transfer Credit Cards

Key points to remember

Aim to clear the balance before the 0% period ends. Divide the amount you owe by the number of months in the 0% period; then pay this amount every month to clear the balance.

If you can't clear the balance before the 0% period ends, you could balance-transfer again to another 0% deal.

Be aware that once the 0% period ends, your interest rate could increase significantly.

Failure to make at least the minimum monthly payment could result in penalty fees, or even withdrawing the 0% offer. You could then be moved onto a higher, expensive rate.

Note that minimum payments ensure debt lasts longer.

Whilst a balance transfer will be interest-free for many months, spending and cash withdrawals usually are not. These will incur interest and possibly charges.

If you withdraw cash, interest incurs from the date of the withdrawal, until it's paid off.

If you need to spend, an all-rounder card could be a good option. These cards include both balance transfers and spending on the 0% period.

Usually the 0% period is reserved for balance transfers made within the first 90 days, though can vary by card. After this "deadline" any transfers will likely incur interest at the card's rate until paid off fully.

Some card applications require you to request the balance transfer when you apply. Some will allow transfers at any point during the 0% period. Note that once the account opens, the clock starts on the 0% offer. So it would be better to transfer the balance sooner rather than later.

If you don't request a transfer in your application, you can either request it by calling the lender or using their online banking tools.

What is a balance transfer credit card?

A balance transfer allows you to move the outstanding balance from one card to another. Your new card provider pays the debt for you, so you will need to pay your new provider instead. The benefit is that the interest rate is at 0% for a specific period. You can clear the debt quicker as your payments will be towards the actual debt, rather than interest.

You may have to pay a one-off fee, though some providers may not have one, allowing you to clear debt for free.

It’s recommended to pick a card with the lowest fee in the time you feel confident you can pay off the debt in full. In any doubt, selecting the longest 0% period is a good tactic, even if a fee applies.

It’s important to understand that a balance transfer card should not be used for new spending. This is because the interest rate for new spending is usually high. An all-rounder card is a better option if you need to transfer a balance and spend.

What is an all-rounder card?

An all-rounder credit card offers 0% interest for many months on new spending and a balance transfer. This is worth considering if you need to borrow more for an affordable, one-off purchase.

Note that you may not get a longer 0% period when compared to a pure balance transfer card.

What if you can’t get a 0% balance transfer card?

If you’re unable to get a balance transfer card, you may still be able to move to a low rate or even 0% deal on your existing card.

As an example, if you’re paying off debt at 21.9% APR on one credit card, you may be able to move to a low rate deal at 11.9% APR on another card you have (if you have spare credit limit). Doing so could save you $100s of interest in a year.

Lenders will sometimes offer deals to transfer new debt to your existing card. These will usually incur a one-off fee. Offers can be found through your online account or by calling your provider.

FAQs

No. The old card will stay open, and you'll be able to continue using it if you wish. If you're trying to clear your debt though, spending on credit is not wise.

You will need to contact your old card provider to close your old card and account.

Each time you make an application for a new card, a footprint is noted on your file. So moving a balance to another card may impact your credit score. That said, you could improve your score by paying off your debt as discussed above.

To reduce the impact on your credit score, it's best to understand your credit score first using a service like Borrowell. Also spread out card applications, rather than making many in a short space of time.

If you're on a 0% deal that is ending and you want to transfer the balance again, applying around 6-9 weeks before is a good idea. This gives you enough time to move the debt if you get the card whilst still on an existing 0% deal.

This should be possible though you should call the new card provider beforehand. They may not be able to process the transfer request online: American Express has 15 digit card numbers, instead of the standard 16 digits. So some provider systems may not be able to process the shorter number.

A credit card could compound any debt or day-to-day expense struggles you may have. Our debt help guide may offer you other options you can take instead.

Essential information

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