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Balance transfer comparison tables can be quite confusing, so it helps to first figure out which type of offer best suits your financial situation before you dive into the melee. Balance transfers are a bit like the Goldilocks story—the best for one person might be suboptimal for next person.
How to Choose a Balance Transfer for You
In essence, finding the best balance transfer offer is about figuring out how many months you need to clear your debt, then choosing a suitable 0% promotion with the lowest fee. (Shorter 0% promotional periods generally charge a lower balance transfer fee).
- 1. Decide how long you need to pay down your debt in months, as balance transfers are marketed in months not years (e.g., 18 months)
- 2. Find balance transfer offers with a similar 0% APR period (e.g., 18 to 20 months)
- 3. Of those, choose an offer with the lowest balance transfer fee (but keep in mind other factors as well)
How Long of a Balance Transfer do You Need?
Choosing the right balance transfer card will depend primarily on how long you need to clear your existing debt. To figure this out, use the table below which shows the months needed to pay down debt on a 0% interest card, by starting balance and monthly payment. For example, someone with a £2,000 outstanding debt who can pa £100 per month would be debt free in 20 months (£2,000 divided by £100 = 20 months).
|Months to Clear Debt on 0% Balance Transfer Card||£1,000 Balance||£2,000 Balance||£3,000 Balance||£4,000 Balance|
|£200 monthly payments||5||10||15||20|
|£150 monthly payments||7||14||20||27|
|£125 monthly payments||8||16||24||32|
|£100 monthly payments||10||20||30||40|
Narrowing Down the Field
Once you have a feel for how long it will take you to pay your balance down to £0, look for a suitable balance transfer offer with a relatively low balance transfer fee. The balance transfer fee is a percentage of the transferred balance—balance transfer fees typically range from 0% to 3.5%. In most cases shorter balance transfer offers charge lower fees; longer balance transfer offers charge higher fees.
It makes sense that a credit card would charge a higher fee for a longer 0% promotion, because the company is taking on risk for longer. However pricing can be inconsistent from company to company, depending on their current risk appetite for new balance transfers. As a result, it is very important to compare products from multiple providers to find the best deal.
There is No Best
Actually, there is no "best" balance transfer card—it all depends on your financial situation. For example, someone who can pay off their debt within a shorter time frame (e.g., 12 months or less) may secure a no fee offer (i.e., a 0% transfer fee). On the other hand, someone needing more than 2 years to repay their outstanding debt might end up paying a fee (e.g., 1.5% - 3%) for the additional time.
We've heard it recommended on other websites to take a no-fee balance transfer (even if the 0% APR period isn't long enough for you) with the argument that you could always move the remaining balance to another 0% card at the end of the first card's 0% period—and so on. There are certainly risks to this method, however.
For example, if your credit profile has changed, or the risk appetite in the market, you might not find a new credit card willing to lend to you. Also, every time you apply for a new credit card this action is marked on your credit history and may negatively impact your credit score—surely a situation to avoid.
Balance Transfer Credit Card Offers
While the balance transfer market changes constantly, there are a few consistent players that seem to offer relatively competitive combinations of 0% APR period and fees. Amongst these are Halifax, Virgin, Santander and Sainsbury's. Keep an eye out for offers from these companies, although there may be better offers available in the marketplace. Below we highlight some different balance transfer scenarios.
Examples of How To Choose the Best Balance Transfer Credit Card for You
Balance transfer offers are defined by two key features: the fee and the interest-free period (or duration).
The balance transfer fee is a charge, usually calculated as a % of the balance you are transferring. This fee can range from 0% (e.g., "no fee") to 3%, or more and is payable when the balance is initially transfered.
The interest-free period is the number of months you get 0% interest on transferred balance. Essentially, your balance sits for free during the interest-free period, while you work to pay down the outstanding amount with your monthly payments.
The fee size is directly related to the interest-free period. Usually, the longer the interest-free period, the higher the fee. You can find shorter-duration cards, with interest-free periods up to 20 months or so, that charge no fee at all.
Best Balance Transfer: You don’t want to pay a fee
Those who can pay off their debt within 1 - 1.5 years can find offers in the market that don't charge a balance transfer fee at all (so long as you make the transfer within the initial window, usually 30-60 days). Choosing a no-fee balance transfer offer means you can pay back your debt without paying any fees or interest charges at all—all of your payments will go directly towards paying down your outstanding balance, leaving you debt-free sooner.
Best Balance Transfer: You need as much time as possible to pay down your debt
If you need a bit more time to slowly pay off your credit card debts, there are balance transfer cards that won't charge interest for up to 30 months or so. This has come down from 2017/18 when the longest balance transfers were up to 43 months long. Balance transfer cards offering the longest durations charge a one-off fee when you transfer the balance, which is typically around 3%.
Best Balance Transfer: You want a balance transfer card for new purchases, too
If you have transferred a balance that is now sitting on a balance transfer card, once you're past the 0% on purchases intro period (if there is one), avoid putting new purchases on this same credit card. Doing so will subject your new purchases to unnecessary interest charges.
The fine print in the Interest section in the Summary Box of most credit cards advises that new purchases will remain interest free IF you pay the full balance in full each month. This balance includes the amount of any transfers.
So even if you intend to pay off new purchases every month to avoid paying interest on them, if your card still has some of your transferred balance, you will be charged interest on new purchases from their transaction date until the date you pay them off. There's no "grace period." For this reason, save yourself money by putting new purchases on a card that you haven't used for a balance transfer.
If you want to learn more, read our article What is a Balance Transfer.
Balance Transfers: What to Look Out For
There are a few circumstances in which you can lose your 0% promotional interest rate or your promotional transfer fee—in either case it will cost you.
- Transfer the balance within the initial window (often 30-60 days) to be eligible for the 0% promotional interest rate
- Pay on time each month AND stay within your credit limit to keep your 0% promotional interest rate
- Weaker credit scores may get a shorter interest-free period (e.g., 12 months instead of 20 months). Check this detail on any card before you apply—these cards are marketed with a 0% APR up to a certain number of months
- Check for annual fees
In almost all cases by exceeding your credit limit or not paying at least the minimum monthly payment on time, you will lose the 0% APR intro period. If that happens, you will be charged interest at the stated balance transfer rate, which is usually well in excess of 19.9% APR. (You can read more about typical APRs in our article Average Credit Card Interest Rate (APR).)
Also, your balance MUST be transferred within a specified window—typically 60 or 90 days—or you'll pay a higher transfer fee and the stated interest rate (typically 19.9% or more). Also, it's important to be aware that, depending on your circumstances, you may be offered a shorter promotional period and/or higher representative APR.
Regardless of the card you choose in the end, remember to always stay within your credit limit and pay at least the minimum monthly payment on time, or you'll lose the 0% APR intro rate.
How a Credit Card Balance Transfer can be Beneficial
Balance transfer credit cards can help consumers manage their credit card debt, by moving an outstanding balance from one or more interest-charging credit cards to a 0% interest card. Balance transfer credit cards can have a positive impact on your financial situation in two ways:
- No interest charges: Save money by not paying any interest charges on your outstanding balance during the 0% promotional period.
- Become debt free sooner: Generally speaking, the whole of your monthly payment will be applied to pay down your balance, allowing you to become debt free sooner.
Making Monthly Payments on a Balance Transfer Card
You are still responsible to pay (at least) your monthly minimum payment every month, with the benefit that your entire payment will go towards reducing your outstanding balance—and not towards interest. In other words, "0% balance transfer deal" doesn't mean you will pay nothing, it just means that you will pay no interest for that period. In fact, you must make at least the minimum monthly payment on time or you'll lose the 0% promotional rate!
TOP TIP: Let's clarify one thing here—that monthly payment will need to be a lot more than the "minimum" monthly payment if you want to clear your debt by the end of the 0% promotional period. How much should you pay each month? Figure this out by dividing the transferred balance by the number of months you pay 0%.
Let's work through an example of the average UK cardholder with a balance of £1,500 on a credit card that is charging you 19.9%. If you can secure a 0% balance transfer offer for 15 months, then you should ideally pay £100+ a month to clear your balance during the promotional period
How To Transfer a Credit Card Balance
Once you have applied for and been accepted to your new balance transfer credit card, transferring the balance is quite easy. While each bank will have a slightly different process, it generally works like this:
- 1) Log into your online account (the bank will instruct you how to set this up)
- 2) Click on the link to transfer a balance
- 3) Enter the amount you want to transfer
- 4) Enter the details of the credit card from which you are moving your balance
- 5) Check and hit submit!
Help With Debt
If you're worried about paying back your debts, it can be a good idea to get in touch with one of the many debt charities in the UK. They can help you plan the best way to pay back your debts and may suggest options that are better for you than a balance transfer credit card. Here are a few to get you started: