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Guide to 0% balance transfer credit cards

Category: Credit cards
Author: Tim Leonard
Updated: 26/03/2018

A 0% balance transfer credit card can save you a shed-load in interest if you currently have balances on expensive credit cards, store cards or even a current account overdraft.

Most credit cards will let you transfer a balance, although this will be subject to the following conditions:

If you want to transfer a balance, you will normally have to pay a fee to the credit card provider you are transferring the balance to. This is usually in the region of 2% to 3% of the amount you transfer, although some fees can be higher while other providers charge absolutely no fee at all.

How 0% balance transfer credit cards work

Although you can transfer a balance to most credit cards, those that offer an introductory 0% interest period can save you the most money. These cards do still tend to charge a balance transfer fee when you move debt across, but they don't charge interest on the transferred balance for a set introductory period.

Recently, balance transfer credit cards have become increasingly competitive with their introductory periods, so shop around to get the best deal.

At the end of the introductory period, your transferred balance will go onto your lender's standard balance transfer rate, which will most likely be well over 15% per year.

Make sure you pay at least the minimum payment each month on your credit card, otherwise the provider may decide to withdraw the introductory 0% offer and put you on a more expensive interest rate.


Do this…

When you transfer a balance to a 0% interest credit card you've got a golden opportunity to repay your debt cheaply.

Make a monthly repayment plan and try to pay more than the minimum payment. Some providers will let you set up a standing order for a set amount or fixed percentage every month, so take advantage of this and get your debt repaid!


Don't do this…

The best 0% balance transfer cards don't have the same generous deals for purchases. So don't make purchases or withdraw cash using the credit card, as this will mean that you're paying interest and not using the card in the cheapest and most efficient way.

If you like to spend on your credit card, keep a separate card for purchases. However, even if this has a generous interest-free period of its own, try not to spend too much as you could end up paying off one debt only to find you have run up another!

If you have a big purchase in mind, and want to do a balance transfer at the same time, you could go for a combined 0% card for balance transfers and purchases. These tend not to have the longest 0% period for either transfers or spending, but on the plus side you have just the one card to manage.

You still have to make the minimum payment!

A 0% interest credit card does not mean that you don't make payments for an initial period, like some interest-free loans you may get from furniture or electrical retailers.

You must pay at least the minimum payment every month: you can normally set up a direct debit to avoid missing it.

The great thing about a 0% balance transfer credit card is that (providing you don't make any purchases or withdraw any cash using your card) 100% of your payment goes towards reducing your debt.

Be careful not to get into further debt

When you take out a new credit card to transfer a balance, the danger is that you put a balance back on your old card and end up with twice the problem.

If you don't want that to happen, you could:

  • Cut up your old card to prevent you from spending on it and close the account with the card provider.
  • Ask your credit card provider to reduce your credit limit.

What next?

Compare 0% balance transfer credit cards

Check out our whole of market credit card search to bring you the best 0% spending and 0% balance transfer cards

Dealing with debt

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.