What is a balance transfer credit card?

Fortunately, the concept is a very simple one. If you have debt on credit or store cards you can't afford to clear, rather than leaving it where it is – where you're likely paying very expensive interest each and every month – you transfer the balance to a new card, which offers 0% interest for a set period (usually up to two and half years).

As there's now no interest being added, your monthly repayments will clear the debt you owe much quicker, which can save £100s or even £1,000s in interest.

The amount you'll be able to transfer is determined by the new card, as you're typically limited to 90% to 95% of your new credit limit. So if you had £900 to transfer, you'd need a new credit limit of at least £950 to £1,000.

If you're confident that you understand how these cards work, you can find our top picks in our top balance transfer credit cards guide – and our Balance Transfer Eligibility Calculator will reveal the cards you've the best odds of getting. But if you want to understand more about how these cards work, then read on.

What's a balance transfer fee?

Most balance transfers will charge a one-off fee to shift your debt across, typically between 1% and 3% of the amount you're transferring.

For example, if the balance on your existing card is £2,500 and the balance transfer fee is 3%, you'd be charged £75. This is then added to your balance, so you'd owe £2,575 on the new card – though this is usually a drop in the ocean compared to the amount of interest you'll be saving.

There are also a few cards with no fee at all, though as these tend to offer shorter 0% lengths, you'll need to be able clear your debt quicker.

How long does a balance transfer usually take?

It's generally a quick process, with the new card provider able to complete the actual transfer within a day or two. This is after the account has been opened and set up though, so you could find there's a few more days required for the lender to first process your application.

Overall, expect to wait for around a week from application to the transfer completing, which should be enough time to factor in non-working days or other delays.

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

Before choosing a new card, you'll need to factor in this key rule. So if your existing card is with Sainsbury's Bank, you won't be able to get a new card with Sainsbury's to transfer your balance to.

Just to make it a tad more complicated, some banks are part of a wider group, so the restrictions extend across several brands. For example, NatWest group includes NatWest, RBS and Ulster Bank, so you wouldn't be able to transfer a balance between any of those. See linked banks for full info.

2. Make the transfer as soon as you can to benefit from the longest time at 0%

You usually need to request the transfer within the first 60 or 90 days for it to qualify for the 0% period (though always check the terms of your new card as a few require it done when you apply). If you transfer after this point, you'll pay interest at your new card's standard rate and may pay a higher transfer fee too.

The 0% period also starts from the day your card is opened, so waiting to transfer just means fewer months will be interest-free.

3. Always pay at least the minimum payment each month, and on time

The minimum payment is the lowest amount you must pay each month on or before the due date, which will be found on your credit card statement. Failure to pay on time usually results in a fee and, worse, you'll likely lose the 0% offer. In addition, a missed payment marker will be added to your credit report, which can damage your ability to get future credit.

For safety, set up a direct debit so this minimum is automatically paid.

4. Ideally, set your monthly repayments so you'll clear the card before the 0% period ends

For a balance transfer to work perfectly, you'll have no debt left to pay when the interest-free period ends. To achieve this, just take the total amount you owe and divide it by the number of months your new card offers you 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.

Alternatively, if you get to the end and still have debt left on the card, you can simply transfer the balance again to another 0% balance transfer card, effectively starting the clock again.

5. Never use your new balance transfer card to spend on, or withdraw cash

Usually, the 0% period is just for balances you've transferred from other cards. So if you spend or withdraw cash, you'll often be charged expensive interest from day one.

If you want to continue spending on a credit card, use your existing card (as the balance transfer doesn't close your old one down) and ensure just to use it for everyday amounts you can afford to clear IN FULL each month.

Alternatively, if you have a need to borrow, 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 here. See our top 0% all rounder cards guide for full help.

There's no single 'best balance transfer card', as what's best for you might not be for someone else.

Each lender decides who to give a card to based on an acceptance criteria, which considers factors like your income and credit history. This 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.

The best way, therefore, is to use our 0% Balance Transfer Eligibility Calculator, which shows your acceptance chances for many of the best balance transfer cards. This protects your creditworthiness as, unlike applying for a credit card, our tool uses a soft search of your credit file, which other lenders can't see.

How do I choose the right balance transfer card for me?

Our eligibility calculator shows your own bespoke best-buy list, based on how likely you are to be accepted.

If there's a long list of cards to choose from...

Go for the card with the lowest or no transfer fee, that offers enough time at 0% for you to clear the card. If you're not sure, play it safe and go for the longest 0% you can.

It's also worth noting that you'll need to careful when applying to an 'up to' card. This is where the card provider essentially has two or three offers – one for top credit scorers and shorter and/or more expensive versions for others.

For example, a card might have a headline deal of 'up to 25 months with a 2.5% transfer fee'. Here – unless you're showing as pre-approved – there's a risk of applying and getting a lesser deal, of say 18 months or 12 months (we always say what this 'downsell' is in our eligibility calculator).