What is a balance transfer credit card?
Balance transfers explained
If you pay interest on your credit card and can't afford to clear the balance in full, a balance transfer credit card could be your secret weapon. It lets you move existing card debt to a temporary 0% interest deal, giving you a chance to pay it off faster. Here’s how it works and what to watch out for.
First, a quick overview of balance transfer cards...
A balance transfer card helps you pay off your credit card debt faster as you have a set period of time at 0% interest. Using this type of credit card can be low-cost or even free in some cases.
Most balance transfer cards will charge a one-off fee to shift your debt to it, typically between 1% and 3% of the amount you're transferring.
The amount you can transfer depends on the credit limit you're given on the new card. Many providers cap balance transfers at around 90% to 95% of your credit limit, though limits vary by lender. So it may not cover your all of your existing card debt.
It typically takes around a week from application to the transfer completing.
You can't transfer a balance from one card to another from the same bank. Check which banks are linked.
Don't just apply - go via an eligibility calc. Our 0% Balance Transfer Eligibility Checker speedily shows acceptance odds for top cards (some are 'pre-approved'), without affecting your creditworthiness.
Go for the LOWEST FEE within a 0% time long enough to clear the debt. Longer balance transfers usually have a bigger one-off fee to transfer. So if you've a choice and can clear debt quicker, go for a shorter deal to minimise fees. Unsure? Go long.
If you do get a card, ALWAYS follow the Balance Transfer Golden Rules:
a) Never miss the minimum monthly repayment, or you could lose the 0% deal.
b) Clear the card before the 0% ends, or the rate rockets to the higher APR.
c) Don't spend or withdraw cash. It usually isn't at the cheap rate.
d) If you don't transfer at application, you've usually only 60-90 days to get 0% deal.
Want to know the top balance transfer cards right now? See Best balance transfer credit cards.
How does a balance transfer credit card work?
If you have credit or store card debt you can't clear, you can transfer it to a new card offering 0% interest for a set period (sometimes up to three years). With no interest being added, more of your repayments go towards clearing the debt, potentially saving £100s or even £1,000s.
The amount you can transfer depends on the credit limit you're given on the new card. Many providers cap balance transfers at around 90% to 95% of your credit limit, though limits vary by lender. So if you wanted to transfer £900, you'd typically need a credit limit of around £950 to £1,000 or more. It's worth noting you can transfer balances from more than one card.
Ready to compare cards? See our top balance transfer credit cards and use our Balance Transfer Eligibility Calculator to check which cards you've the best chance of getting. Want to understand more first? Watch Martin's explainer video below or read on...
Transcript of what Martin said on the show
From The Martin Lewis Money Show Live on Tuesday 21 January 2025, courtesy of ITV. All rights reserved. Watch the full episode on ITVX.
"Okay, so what is a 0% balance transfer? This is for cutting the cost of existing debts. It's absolutely the crucial weapon. I want to really break it down for you. Let's imagine you have £2,300 worth of debt, one on a Stalecard and one on a Rottencard, both at relatively high rates of interest.
"So what do you do? Well you apply for a new card that's got a specific balance transfer deal to shift the debt. Here we go. The new card. We'll call it the Martcard. Hey, why not? It's 31 months at 0%. You've got a £2,000 credit limit. So what do you do? Well, the first thing is you look at the most expensive debt. That's the one growing quickest.
"That's the one you want to get rid of. And you say, “Please pay the debt off that one.” And that's what the balance transfer is. There we go. The new card pays off the debt on the old card. So you now no longer owe it. It's debts gone down to £0 and you now owe £1,400 pounds, but at 0% for 31 months.
"But you've got a credit limit of £2,000. Now, in terms of balance transfers, they only let you balance transfer 90% of the credit limit. So that's £1,800 in this case. So we've got £400 left. Well you may as well do it again. There we go. Pay off the Stalecard. Now you've got £1,800 worth of debt here and only £500 worth of debt on the Stalecard.
"So if we think of it, roughly your average before was around 23 or 24% APR on £2,300 debt, about £600 a year interest you were paying, now that's all interest-free. You got only £500 debt on there. So that's what, just over £100. That's £500 of interest saved, which means far more of your money is clearing the actual debt rather than just paying the interest. And that gets you debt free quicker. That's why balance transfers are so important.
"You have something? [speaking to his co-host]. "Yeah I have. Anne’s been in touch [referring to user who has written in to the show], she wants to know on this one...
“I have a £4,500 credit card debt, and I'm thinking of a 0% balance transfer. I've been offered a 13 month interest-free credit card for £2,750. Is it worth me doing this as doesn't cover the full amount?”
"Yes yes yes yes yes. Okay. Right. You've made an application. It's gone on your credit file. Your credit file is already affected. You've already spent your creditworthiness and you spent it on a really good thing cutting the cost of your debt. People often get in touch and they say the credit limit they’ve given me is too low. What should I do?
"Well, use it even if it's for £200. £200 at 0% is better than £200 at 25%. So if we talk about that £2,750, assuming you're on a typical APR is £700, £800 a year, you're paying and you could now be paying 0%, even though the rest of your debt you're still paying interest on.
"It's quite like this scenario [referring to the Stalecard, Rottencard and Martcard from earlier]. It's still worth doing. Then once that money's been shifted across, then now get back onto an eligibility calculator, more on that in a moment, and let's see if you can get another balance transfer for the rest. It might be slightly more difficult. You might not be able to get it, but at least you're bringing your interest rate down. So if you get a low credit limit, still use it. You've spent it, back with the application, use it.
[His co-host speaking] "Okay, now I think people want to know Martin about the best deals." [Martin replies] "And that’s my job, that’s what I do." [His co-host continues] "Lorna that's been in touch here. Lorna’s asking...
“What is the best and cheapest way to get rid of credit card debt?”
[Martin continues] "Well, let me carry on to my next page. Okay. So my big message to anyone who's paying interest on credit card debt. If you cannot afford to clear your credit card debt or your store card debt, you can't afford not to try to lower the interest rate, maybe to interest free.
"So rule number one is protect your credit history. Use an eligibility calculator first. That is a tool. Better to do one where you get a comparison. It will tell you your odds of getting the top cards, and it does that before applying so you can see which [you] are most likely to get so you can home in and hopefully apply where you're going to be successful to minimise the impact on your credit file. So I'd always apply via an eligibility calculator. Some individual card firms have them, but I go for one that gives you a spread of different cards, so you can see what's most likely.
"Rule number two. When you do a balance transfer there's usually a one-off fee, the amount you're shifting. So if you're shifting £1,000 and the fee is 3%, you pay £30 to do it. So, the longer the card, the bigger the fee. If you can repay more quickly and you're sure you can repay more quickly, go for a shorter card, lower the fee because it'll cost you less. But if you're not sure, just go long. Have a longer 0%, play safe."
As an example, imagine you owe £5,000 and are being charged 25% annual interest. Here's a rough price breakdown of what a difference transfering to a 0% balance transfer card with a one-off 2% fee can make...
Detail | Without transfer | With transfer |
|---|---|---|
The debt | ||
Starting balance | £5,000 | £5,000 |
Interest rate | 25% rep APR | 0% for 20 months |
The cost | ||
One-off transfer fee | None | £100 (2% of £5,000) |
Interest paid over 20 months | ~£1,900 | None |
Total extra cost | ~£1,900 | £100 |
Paying it off | ||
Balance to repay | £5,000 + ongoing interest | £5,100 (fixed) |
Monthly payment to clear in 20 months | ~£380 a month | £255 a month |
Total cost | ~£6,900 | £5,100 |
What is a balance transfer fee?
Most balance transfer cards charge a one-off fee, typically 1% to 3% of the amount transferred.
For example, transferring £2,500 with a 3% fee would cost you £75. This is usually added to the the amount you owe, making your new card balance £2,575. While that may seem expensive, it's usually far less than the interest you'd pay by keeping the debt on your existing card.
Some credit card providers offer cards with no transfer fee, though as these tend to offer shorter 0% promotional periods, you'll need to be able clear your debt quicker.
How long does a balance transfer usually take?
If you're transferring your card debt to an existing balance transfer card, it'll usually be processed in one or two working days.
If you're applying for a new balance transfer card, you'll usually need to wait until your account is set up before making the transfer. This could take five to ten working days, but you may be able to ask for a balance transfer as part of your application, which may may speed things up.
Depending on your provider, you can typically make a balance transfer request through your online banking, mobile app or over the phone.
Things to consider before taking out a balance transfer credit card
If you've run up a balance on your credit card that you can't afford to clear at the end of every month, then a 0% balance transfer credit card is almost a no-brainer.
However, as with most financial products, there are some key things you need to know to make sure you use the card correctly.
1. You can't transfer a balance from one card to another from the same bank
Balance transfers are usually only allowed between different banking groups. So before applying, check whether your existing card provider and the new card provider are linked. For example, NatWest, RBS and Ulster Bank are all part of the NatWest Group, so you can't transfer a balance between them. See which banks are linked.
2. Make the transfer as soon as you can to benefit from the longest time at 0%
You usually need to make the transfer within the first 60 to 90 days to qualify for the 0% deal (though some cards require it when you apply). Miss that window and you'll typically pay the standard interest rate, and possibly a higher transfer fee too.
The 0% period starts from the day your card is opened, so delaying the transfer means fewer months interest-free.
3. Always pay at least the minimum repayment each month, and on time
The minimum repayment is the lowest amount you must pay by the due date each month - it'll be shown on your credit card statement. Failure to pay on time usually results in a fee and, worse, you'll likely lose the 0% offer. You'll also get a missed payment marker on your credit report, which can damage your ability to get future credit.
For safety, set up a monthly direct debit to automatically pay the minimum repayment.
4. Aim to repay the full balance before the 0% deal ends
The goal with a balance transfer cards is to have no debt left to pay when the interest-free period ends. To achieve this, take the total amount you owe and divide it by the number of months your new card offers at 0%.
For example, if you transferred over £2,500 with a 3% fee, you'd owe £2,575. If the new card offered you 25 months at 0%, you'd need to pay £103 each month to avoid paying interest at the end.
If you get to the end and still have debt left on the card, you can transfer the remaining balance to a new 0% balance transfer card (if accepted), effectively starting the clock again.
5. Don't spend on your new balance transfer card and NEVER withdraw cash
Usually, the 0% period is just for balances you've transferred from other cards. So if you use it to make new purchases or withdraw cash, you'll often be charged at an expensive interest rate from day one.
You can continue using your existing card if you need to (a balance transfer doesn't close your old credit card) but if you do, ensure you clear the balance IN FULL each month to avoid interest charges.
If you need more credit, there are special 'all rounder' cards that give 0% interest periods on both spending and balance transfers, though the transfer periods tend to be shorter. See our top 0% all rounder cards guide for full help.
What are the pros and cons of a balance transfer?
Below are the key advantages of balance transfer credit cards, plus things to consider before getting one:
Advantages of balance transfer cards
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Allows you to clear debt faster. As you'll no longer be paying interest on your card debt, your payments will clear more of the balance every month, so the amount you owe will reduce much quicker.
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Gives you a defined timeframe to aim to clear your debt. You'll have a set number of months at no interest, so this gives you a clear deadline to try to clear the debt by. For example, if you owed £1,200 and had 24 months at 0% interest, paying £50 a month would mean you're debt-free after two years.
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Are low or no cost. Opt for a card with no transfer fee and, providing you can clear the debt before the 0% period ends (or you're able to transfer it again), a balance transfer will be completely free. Even if you opt for card with a transfer fee, you'll pay a small amount compared to the amount you'd rack up in interest by keeping it on your existing card.
Things you need to think about...
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You need to take out a new card, which will have a short-term impact on your creditworthiness. Every credit application marks your credit file, and too many in a short space of time can have a negative impact. So it might be worth holding off if you've another important credit application coming up, such as a mortgage.
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You may not get a large enough credit limit to transfer all your card debt. The new card usually allows you to transfer up to 95% of its credit limit. So if the new card's limit was £1,000, you could transfer £950 from your existing card(s). If that's not enough, transfer the maximum amount you can across and see if you can get another balance transfer credit card from another provider to transfer the rest
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They're expensive if not used right. A balance transfer credit card is usually only good for balance transfers. Spending and withdrawing cash will almost always be an expensive option. If you need to borrow more as well as pay off debt, an all rounder card is a better option.
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You can lose the 0% deal if you don't manage the card well. If you don't make at least the minimum repayment toward your new 0% card every month, you'll get a negative mark on your credit report, a missed payment fee of up to £12, and will likely lose the 0% deal, meaning you'll be paying interest on the debt again. So, always, always make the minimum repayment.
What's the best balance transfer credit card?
There's no single 'best balance transfer card', as what's best for you might not be for someone else.
Acceptance criteria differs between card providers, so while we can pick the best cards on the market (and we do in our top balance transfer cards guide), whether or not you can get it is another thing.
Our 0% Balance Transfer Eligibility Calculator shows you your chances of being accepted for many of the best balance transfer cards, without impacting your credit score, as it uses a soft search of your credit file, which lenders can't see.
If there's a long list of cards to choose from...
Choose the card with the lowest (or no) transfer fee and enough 0% interest time to clear the balance. If you're unsure, opt for the longest 0% deal available.
Some providers show the maximum 0% interest period available, for example 'up to 36 months', but this may not be offered to everyone. The longest interest-free periods are usually for those with a top credit score.
Unless you're showing as pre-approved in our 0% Balance Transfer Eligibility Calculator, you may be offered a shorter interest-free deal (we always say what this 'downsell' is in our eligibility calculator).
For more information, see our Balance transfer FAQs.
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