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Should you transfer a credit card balance?

Balance transfers can help you to lower the cost of your credit card borrowings and consolidate multiple debts. They could potentially help you lower your outgoings as well.

How a balance transfer could work

Transferring your balance means moving all or part of a debt from one financial provider to another. People often use them to take advantage of lower interest rates. Banks and credit card companies often charge a fee for balance transfers. These fees usually depend on the size of the transfer and may also vary according to the length of the introductory period. Be sure to check the fee and take this into account when calculating potential savings.

If you have a balance on a credit card, it’s a good idea to reduce the interest you pay

What it costs

Banks and credit card companies often charge a fee for balance transfers. These fees usually depend on the size of the transfer and may also vary according to the length of the introductory period. Be sure to check the fee and take this into account when calculating potential savings.

Things to watch out for

Switching your debt to a card with a lower interest rate lets you do these things:

What are they for?

Credit cards are genuinely useful, provided you know how best to use them:

Working out the total cost

Rachel has £1,000 of debt on a credit card with an APR of 17.9%. She can afford to pay off £20 a month. Here are examples of the savings she could make by transferring her balance:

Introductory rateBalance transfer
handling fee
How much
Rachel saves
0% for 23 months23.32%£260.93
0% for 22 months2.9%£253.29
0% for 21 months2.6%£244.54
0% for 18 months3%£94.00
0% for 16 months1.99%£60.23

You’ll need to transfer an amount that’s within the credit limit on your new card, minus the fee.

How to transfer a balance

Before you start, it’s best to speak to your bank or credit card company to find out how to transfer your balance. You may be able to do this online.

Important

Make sure you repay your debt by the time the preferential interest rate period runs out. Don’t assume that you’ll qualify for another deal.

What it costs

Banks and credit card companies often charge a fee for balance transfers. These fees usually depend on the size of the transfer and may also vary according to the length of the introductory period. Be sure to check the fee and take this into account when calculating potential savings.