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What is a 0% balance transfer credit card?
The typical credit card interest rate can be 19% (or more!). That can make paying down a balance challenging. That’s because even as you make payments, the balance continues to grow thanks to all of the interest that’s added.
A balance transfer card, however, is a credit card that offers a period of 0% interest on balances that you transfer from other credit cards. That makes these cards a great financial tool to consolidate your debt and get some breathing room while paying down your credit card balance.
This is what makes a balance transfer credit card so great. It gives you an extended period of time — sometimes as much as multiple years — to pay down your existing balances without ending up with new interest charges.
How does a balance transfer card work?
A balance transfer is a simple process. In effect, the card company for your new card pays the card company from your old card.
For example, let’s say you transfer a balance of £5,000 from a NatWest credit card to a Sainsbury’s Bank credit card. In this case, the balance on your NatWest credit card account will decrease by £5,000 while your balance on your Sainsbury’s Bank card will increase by £5,000 (plus any applicable balance transfer fees).
Once the transfer is done, you will now have to pay back the balance to the issuer of your new card. In the example above, that’s Sainsbury’s bank. Only now, you will have time to pay it down without ending up with new interest charges.
It is worth noting that you usually cannot transfer balances between cards owned by the same credit card provider. For example, if you have a Barclaycard credit card with a balance, it’s unlikely you would be allowed to transfer that to a Barclaycard balance transfer card. Likewise, if you had a balance on an M&S Bank credit card but wanted to transfer it to an HSBC credit card, this probably would not be possible as they sit under the same financial group.
How to transfer a credit card balance
With most credit card issuers, actually doing a balance transfer is quite simple. In most cases, you give the details of your existing credit card to the issuer of your balance transfer card and they will contact the other issuer and make the transfer.
But to make the most of a balance transfer offer, and avoid pitfalls, it can help to follow these five easy steps:
1. Pick the right balance transfer card for you
The longest balance transfer offer isn’t always the best. You really need to consider your own circumstances and how much debt you have to pay down. Most of the time, the longest balance transfer offers charge a balance transfer fee. If you don’t need that much time to pay down your debt, you can often get a shorter 0% balance transfer offer that avoids a balance transfer fee.
In addition, some balance transfer offers have other perks. These can include a 0% purchases offer or rewards. By comparing cards, you can find one that marries the features that are most important to you. Our balance transfer calculator can show you how much you can save in interest.
2. Transfer your balance
Assuming you’ve been approved for a card, it’s time to make a transfer. Make sure to have the details of your current card on hand. Often you’ll be able to provide these details with your application and your new provider will take care of the transfer. Otherwise, after you’re approved for your new card, you’ll either have to log into your account or call the new provider to provide details of the balance you’re transferring.
It’s very important to keep in mind that balance transfer cards will often have a window of time after account opening in which to transfer a balance. This usually ranges from 60 to 90 days. Balances transferred during this time qualify for the interest-free promotional period. Balances transferred outside this window will not get the 0% offer. Therefore, make a note of the time period you have in which to complete your transfers. Additionally, if you have selected a fee-free balance transfer card then check whether the fee-free period is the same as the transfer window.
3. Continue to make payments to your old card
Balance transfers are not instantaneous. That means you should continue paying the debt down on your existing credit card until you see the balance has been deducted. There may be a small amount of interest due after the balance transfer, even if you transfer your balance in full, so it’s wise to check back after the balance transfer is complete. This ensures that you don’t get hit by a late payment fee.
4. Pay down your balance
You will only feel the benefits of a balance transfer card if you actually pay down your balance. The interest-free period will give you some breathing space and help to get your finances under control, but only if you pay down your debt. If you ignore making repayments for the term of the promotional period, then you will end up where you started: facing high interest charges on an existing balance.
5. Be prudent and keep up the good credit card practices!
Now that you’ve paid off your existing balance (or are well on your way), it is also prudent not to rack up new balances. As you may have found already, building up credit card debt can happen rather quickly. And the standard-rate interest on a credit card is not especially pleasant. This can mean simply being careful with how you spend, but can also mean creating and following a budget that helps avoid overspending.
How we picked the best balance transfer deals
Since everyone’s financial situation is a bit different, the ‘best’ credit card won’t be the same for everyone. Our aim at MyWalletHero is to provide ratings and top picks that will fit the average reader. But when considering our ratings, it’s also important to think about how well the card will fit with your own personal situation. And we’ll talk about how to do that in just a moment.
With that in mind, here are the top things we looked at when selecting our list for the best balance transfer cards:
- Length of the 0% introductory APR for balance transfers – This is obviously an important consideration for a balance transfer credit card. The longer the 0% interest period, the longer you have to pay down your balance without incurring new interest charges.
- Balance transfer fee – Many balance transfer cards, particularly those with very long 0% periods, charge a balance transfer fee. A balance transfer fee is an up-front fee that you pay when you transfer the balance to the new card. This fee typically ranges from 1% up to 3%. We have a strong preference for cards with no balance transfer fee, since that keeps your costs down. But if you’re looking for the longest balance transfer periods on the market, you should prepare yourself to pay a balance transfer fee.
- Representative APR for the card after the introductory APR period – It’s very important to keep in mind that when the interest-free period on a balance transfer card concludes, you’ll incur interest at the regular APR rate. The ideal is to pay down your balance before the 0% period is over, but it’s good to avoid sky-high APRs, just in case there’s still a balance when the regular APR kicks back in.
- Inclusion and length of a 0% introductory APR for purchases – If you already carry a credit card balance, your focus should be on paying that down. But life doesn’t stop while you’re paying off your debt, so having a 0% purchases period, which provides a 0% interest period on new spending, can be a big plus.
- Other fees, including annual fees and non-sterling transaction fees – The good news is that annual fees are very uncommon among balance transfer cards. So think twice if you’re looking at a balance transfer card with an annual fee — there’s a good chance you can find an equally good deal without the annual fee. On the other hand, it’s hard to avoid non-sterling transaction fees (fees you pay when paying in a foreign currency) with balance transfer cards. If you do travel a lot, this may be a good reason to get a travel card to take with you when you’re abroad.
- Rewards, cashback and other perks – Sure, earning rewards may not be at the top of your mind when comparing balance transfer cards, but if you can rewards and other perks along with a long 0% balance transfer period, we think that’s even better.
The scores you see above take all of these factors into account, and we update these ratings as new cards come to market and the terms change on existing cards, so it’s good to check back often.
But like we noted above, the same cards may not be equally attractive to everyone, so let’s talk about how you can compare balance transfer cards yourself.
Comparing 0% balance transfer credit cards
Above, we’ve noted the key features of balance transfer cards. Now, let’s take another look at those features, to help you make your own determination of which card is the best fit for you.
- The length of the introductory period – This is one of the most important factors to consider when comparing balance transfer cards. After all, the 0% period is the whole reason you’re getting the card, right? It might seem ‘obvious’ that the longer the balance transfer period, the better. But that’s not quite true. As we’ll cover further in a moment, the longest offers on the market almost always include a balance transfer fee, so you may end up paying unnecessary fees if you go for a 0% period that’s longer than you actually need. So the best thing to do is to consider how long you (conservatively) need to pay down your balance, and choose a card that matches that.
- Balance transfer fee – A key to improving your finances is to avoid paying fees that you don’t need to — even if they seem small. Imagine you have a £500 credit card balance. If you can afford £50 per month towards paying that down, then — if you’re not accruing new interest charges — you can have that paid off in 10 months. There are quite a few balance transfer cards that offer more than 10 months of 0% interest with no balance transfer fee. However, if you were approved for one of the longest balance transfer offers on the market, you would likely have to pay a 3% balance transfer fee. That’s £15 that otherwise stays in your pocket! But this only works if you can pay off your balance before the 0% period runs out. The typical APR on a credit card right now is around 19%. It doesn’t take a maths expert to see that paying a 3% balance transfer fee to unlock a long balance transfer period is much better than continuing to pay a high APR on that balance.
- The card’s standard APR – Once the 0% promotional period runs out, you’ll start accruing interest at the APR rate that the card issuer gives to you. While it may be your goal to pay your balance in full before the end of the interest-free period, it is worth getting a card that has a low standard APR just in case you don’t keep up with your repayment plan. If you are absolutely sure that you’ll be able to pay off your balance during the 0% period, then the APR matters a bit less. If you’re less sure that you’ll be able to clear your balance in the 0% period, then definitely prioritise taking out a card with a lower standard APR.
- The 0% purchase period – Many balance transfer cards also offer a 0% purchases period. This can be nice to have, because it means that while you’re paying down the balance you’ve transferred, you can also avoid building interest on new purchases. But there’s a catch here. The balance transfer period and the 0% purchases period aren’t always the same, and keeping track of when each period runs out can get confusing if you’re not careful. And that can make avoiding incurring interest more challenging. So if you are interested in getting 0% interest on purchases, the safest bets are usually to either apply for a card that offers 0% periods of equal lengths on both purchases and balance transfers (often called ‘all round’ cards) or take out a separate 0% purchases card. Otherwise, make sure to keep close track of when your 0% periods expire.
- Other fees – As we mentioned above, most balance transfer cards don’t carry an annual fee. So a balance transfer card with an annual fee better be truly top notch to be worth it. As we also already covered, it’s relatively unusual for a balance transfer card to not have a non-sterling transaction fee. So if you do a lot of travelling abroad, consider a travel-focused credit card that doesn’t have that fee.
- Rewards and other perks – All else equal, it’s better to get rewards and other perks with your credit card, right? So when you’re comparing balance transfer cards, keep the most important thing in focus — finding a card that provides a 0% period that’s long enough for you to pay down your balance and, ideally, doesn’t hit you with a balance transfer fee. But if you’re choosing between multiple cards that have similar 0% periods and similar balance transfer fees, why not choose the one that rewards you for your spending as well?
Recent trends in balance transfer cards
If you’re part of the story that the data are telling, then you’re finding the Coronavirus lockdown a time during which it’s easier to spend less. Indeed, total credit card borrowing fell in March versus the prior year. That’s the first time that’s ever happened since the Bank of England began tracking that data.
That means that while there are many things we don’t love about Coronavirus and lockdown, it could be proving a great time to reduce debt. Combine that with the 0% introductory periods that balance transfer cards offer, and it may be possible to make even more progress shedding high-interest debt.
Of course the pandemic has also made banks a bit more uneasy about offering 0% periods. That means the team at MyWalletHero has seen 0% introductory periods fall on balance. Credit requirements are also likely tightening, making it all the more difficult to qualify for the longest 0% terms.
This doesn’t mean that you need to make any rash decisions — 0% introductory periods of two years or longer are still available. But it is a good reminder that there’s no guarantee that 0% offers this long will stick around forever. And besides, there’s no time like the present to pay down high-interest debt.
Do I need a 0% purchases card as well?
When looking at balance transfer cards, you will often see other interest-free promotions, including cards with 0% interest on new purchases. Some cards even offer a dual promotion on both balance transfers and purchases. Whether this would be a good fit for you depends on what you want a card for. If you are focused on getting your existing balance under control, then be wary of taking on debt in the form of new purchases. A 0% interest on purchases offer is not essential when taking out a balance transfer card.
And do bear in mind that the payments that you make towards your credit card balance can get complicated, especially when you’re juggling two 0% promotional periods that are of differing lengths. If you have a card that has, for example, a 0% balance transfer period of 18 months and a 0% purchases period of 6 months, most credit card issuers will apply your payment towards the 0% purchases balance first (assuming you have no other interest-accruing balances on the card), since that promotional period will run out first. But not all issuers do it this way, which can create problems when a cardholder gets confused about where their payment is going.
Which is all to say that if are looking for both a 0% balance transfer period and a 0% purchases period, the easiest choices may be to either find a card with matching 0% periods — that is, 12 months on both purchases and balance transfers, for example — or take out separate balance transfer and 0% purchases credit cards. Otherwise, if you take out credit card with differing 0% promotional periods, just be sure to carefully read the small print, to ensure you know how your payments will be applied to your balances.
How to save money with a balance transfer card
The main benefit of a balance transfer card is that it can save you hundreds of pounds in interest charges over the promotional period. The table below shows how much you would save in interest by paying off a £5,000 balance during a 0% introductory period compared with paying off the same balance over the same time at an 18% APR.
Interest saved by paying off a £5,000 balance with a 0% introductory APR balance transfer card
| Length of introductory 0% period |
Amount saved |
| 12 months |
£500.80 |
| 15 months |
£620.80 |
| 18 months |
£742.54 |
| 21 months |
£865.93 |
The interest saved depends on the length of your 0% introductory APR on balance transfer offer, how much debt you have to repay and whether you have to pay a balance transfer fee (note that the table above assumes no balance transfer fee). However, that being said, most people will find that switching their balance over will save them hundreds in the long run compared with carrying a balance on a standard APR credit card.
What’s the catch?
If you’re carrying a credit card balance and paying high rates of interest, a balance transfer card can be a great tool to help you deal with that debt. But there are a few things that you need to keep in mind when using balance transfer cards.
The main thing to be aware of with balance transfer cards is that many of them carry some sort of balance transfer fee. The fee is typically around 1% to 3% of the balance you are transferring. If your balance is £5,000, for example, you would have to pay £150 in fees with a balance transfer card that charges a transfer fee of 3%.
A general rule of thumb is that the longest balance transfer periods almost always include a balance transfer fee. And that fee is almost always at the high end of the range (3%). Cards with slightly shorter 0% periods can be had that are considered ‘low fee’. This typically means a fee of 1% to 2%. Cards with yet shorter 0% balance transfer periods — though still perfectly long enough for many people — are often available with no balance transfer fee at all.
Another thing to be conscious of with a balance transfer period is how long your introductory 0% promotional period is. One of the largest risks of taking a card out like this is that you still have a balance left on the card when the interest-free introductory period ends. When the 0% period ends, the card reverts to its standard APR. It is wise to ensure you pay the balance off in full before the end of the introductory period. Otherwise, when the promotional period ends, you’ll start racking up interest at the card’s regular rate.
Additionally, in order to keep your interest-free introductory rate, most cards require you to make your minimum monthly payments. If you miss any payments — and with some cards this only has to happen once — you could lose your 0% APR offer. When that happens, interest on balances will be charged at the standard APR.
Finally, any sort of balance that sits on a credit card, whether or not it is under a 0% interest term, could count against you in terms of your credit score. If you apply for a mortgage or a loan, the lender will most likely conduct a credit check, which will look at any existing credit card accounts and the level of debt you owe. While the balance may no longer be incurring interest charges, it is still a balance that you will need to repay and a factor the lender will consider when deciding whether to loan you money.
When a balance transfer isn’t 0%
When people talk about a ‘balance transfer credit card’, it’s usually synonymous with a 0% balance transfer credit card. But a balance transfer does not have to include a 0% period.
Many credit cards allow balance transfers without offering a promotional interest-free period. It’s a very similar thing: you transfer a balance from one credit card to another. But the important difference is that once the balance is transferred, you incur interest at the standard rate for the new card.
This obviously is a much worse deal than a 0% balance transfer. So when considering a balance transfer, be aware of whether the balance transfer comes with a 0% promotional period or not (note that all of the balance transfer cards listed on this page do include a 0% promotional period).
Making a balance transfer without a 0% period can make sense in some circumstances though. For those people on a path of improving their credit for instance. If you have a balance on a card with a 30% APR, transferring that balance to a card with a 20% APR could be a good move. Likewise, there are low-rate credit cards that have low standard rates (typically under 10%). Though this is still much higher than 0%, transferring to a low-rate card could make sense in some circumstances.
Is a balance transfer offer right for you?
A balance transfer card is not the right option for everyone. It is a useful financial tool, but if used incorrectly could lead you into deeper debt.
Give yourself a quick check against the following three statements. If you can say ‘yes’ to all three, then you may be a good candidate for a balance transfer credit card:
- You have an existing credit card debt at a high APR
- You are serious about paying your balance off in full
- You won’t overspend on your old credit card and end up with a new balance to pay down
The pitfall of this type of card is that if you transfer a balance but don’t pay it off, while racking up another large balance on your old card at high standard APR, you could end up in a much worse financial situation.
However, if you are conscientious, do your research and make your payments, a balance transfer card can be a brilliant way to consolidate debt and get yourself out from underneath high interest charges.
