Balance Transfers Introduction

Credit card balance transfer involves using a credit card to pay off the amount outstanding on one or more credit/store cards. The total debt then moves to one card.

The main benefit of balance transfer is a money-saving one. In the competitive credit card market an increasing number of companies are offering a 0% interest rate for a fixed period on balance transfers made by new customers. This allows new cardholders to make considerable savings in interest repayments. Interest free periods vary and certain credit card issuers extend the 0% interest rate offer to cover new purchases, it is worth taking great care to compare balance transfer offers well before deciding which one to choose.

Some companies offer lower than average interest rates on transferred balances for the life of the balance transfer. This may be good news for card users who are not planning to pay back credit card debt in the short term.

Transferring credit card balances is usually a simple process. Once a card application is approved it usually involves a phone call to the new card issuer to transfer the balance(s) from the other card(s). Many credit card companies also offer an on-line service, making it even easier to transfer balances via the Internet.

There is usually a window of time after a new card is approved during which balance transfers attracting the promotional interest rate must be made.

A word of caution regarding balance transfers. Minimum monthly payments still need to be made. Fall behind with minimum payments and fines can be made and interest free offers withdrawn. The same can happen if credit limits are exceeded.

In a market full of balance transfer deals, offers vary greatly. It is important to double-check the details carefully before signing on the dotted line. For example:

  • Are there any additional fees to be paid when balances are transferred?
  • Do I need to make a minimum monthly spend using the new card to qualify for the promotional balance transfer rate?
  • How soon after my credit card is approved do I need to make the balance transfer?
  • What interest rate is charged on new purchases made using the card? In particular, 'Balance transfer for life' cards often put payments towards clearing the low interest balance transfer and not the recent purchases that attract higher interest
  • Do I get charged interest on new purchases from the time the purchase is made?
  • What does the interest rate revert to after the promotional period has finished

Before taking up a balance transfer offer, also take time to consider the amount you need to move and how much you intend to pay off and purchase each month. That way you can be sure that you choose the right card for you.

The latest balance transfer offers in the UK at the moment can be seen at

Phil Edwards is a Business analyst in the city of London, freelance writer for several finance magazines and websites and co-owner of 1st UK Credit Cards and 1st UK Loans