If you are paying interest on credit card debt, a 0% balance transfer card could save you hundreds of pounds and help you pay off your debt much faster. Here is everything you need to know.
- What is a balance transfer?
- The balance transfer fee
- How to use a balance transfer card effectively
What is a balance transfer?
A balance transfer means moving your existing credit card debt onto a new card that charges 0% interest for a promotional period — typically between 12 and 30 months. During this period every penny you pay goes towards clearing the balance rather than paying interest.
For someone with £3,000 of credit card debt at 22% APR, a balance transfer to a 0% card could save over £600 in interest over two years.
The balance transfer fee
Most 0% balance transfer cards charge a one-off fee when you transfer — typically between 1% and 3% of the balance transferred. This fee is worth paying in almost every case where you are currently paying a high interest rate, as the savings on interest will far exceed the transfer fee.
Some cards offer 0% balance transfers with no fee, though these typically have a shorter interest-free period.
How to use a balance transfer card effectively
Once you have transferred your balance, make a plan to pay it off before the 0% period ends. Divide your total balance by the number of months in the 0% period to calculate the monthly payment needed to clear it completely.
Do not make new purchases on your balance transfer card — these will typically be charged at the standard purchase rate, not the 0% promotional rate.
Eligibility requirements
Balance transfer cards with the best 0% periods are typically reserved for applicants with good credit scores. Before applying, check your credit score using a free service such as Experian or Clearscore to understand your likelihood of approval.
Applying for multiple cards in quick succession can damage your credit score, so be selective about which card you apply for.
Bottom line
If you are paying interest on credit card debt, a 0% balance transfer card is one of the most powerful tools available to accelerate your debt repayment. The key is using the interest-free period to clear the balance completely rather than simply deferring the problem.