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Is consolidating credit cards a good idea?

It is estimated that around 40% of credit card holders do not pay off their balance in full each month. With average household credit card debt in the UK currently at £2,688, finding a means of reducing interest costs could be a priority for many people.

Having debt on more than one credit card can make it difficult to keep track of spending and therefore of the overall amount borrowed. One option is to consolidate credit card debts onto one card.

You may be able to obtain a balance transfer card with a lower interest rate than your current credit cards, possibly an introductory interest rate for a set time. For example, some credit cards offer a 0% interest rate on transferred balances for up to 29 months.

Consolidating credit card debts onto a single card may make it easier for you to effectively manage your finances and ultimately help you improve your overall financial position. However, you should also be aware of additional fees and the potential for higher interest rates further down the line. Here’s the lowdown.

Advantages of a balance transfer card

Transferring balances to a balance transfer card with a lower interest rate than your current credit cards could both:

  • save you a significant sum of money in interest costs versus what you would have paid on your existing credit cards
  • give you the chance to repay your debt faster.

For example, someone with total credit card balances of £2,688 at an average APR of 18.9% repaying £200 per month could save £324 over a 14-month period by consolidating their debt onto a credit card with an introductory 0% balance transfer period. Doing so could allow them to repay their debt two months earlier, assuming they continue to make payments of £200 per month.

However, the saving in interest paid must be weighed against the costs of a balance transfer card…

Costs of a balance transfer card

The introductory interest rate on a balance transfer card may be low, but this is the flip side:

  • Balance transfer fee: Balance transfer credit cards often charge a fee of around 3% for transferring a balance. The greater the number of existing balances to be transferred, the larger the total balance transfer fee. This fee reduces any saving in interest costs.
  • High interest rate for new purchases: Balance transfer credit cards may have a high interest rate for new purchases when compared with existing credit cards. If so, any new balances will be charged at a higher rate of interest than would have been the case on the previous cards. Therefore, it makes sense to consider future spending plans before deciding to consolidate debt through balance transfers.
  • High APR after introductory period: The introductory interest rate on a balance transfer card may be followed by a higher interest rate than those of existing cards. Therefore, they may only be worthwhile for individuals who are able to pay off their debt during an introductory period.


A balance transfer card may be worth considering for many people with existing balances on their credit cards, depending on their personal circumstances. Consolidating credit card debt can lead to lower interest costs and greater simplicity. However, there may be fees associated with balance transfers, and interest rates on new spending can be relatively high. Introductory interest rate periods may also be followed by unfavourably high rates of interest.

In itself, consolidating debt onto a single credit card will not reduce your total debt.

Tip: It may also be prudent to take a wider view of income and expenditure each month, to find a means of budgeting more effectively. This task is being made easier through improved technology. For example, it is possible to set up direct debits scheduled for payday in order to make repayments to credit cards and also to make regular payments into savings accounts. Likewise, mobile apps such as Moneybox may help to encourage saving and investing, which can reduce reliance on debt in the long run.

If your ready to dive into the world of balance transfers, a great place to start is our list of top balance transfer credit cards.

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