Paying interest on credit card debt? Here's how a balance transfer card can massively help you cut what you owe.

The cost of living crisis is putting strain on a lot of wallets right now. If you've existing credit card debt, you may be feeling the pinch more than most.

If you are in the position of carrying a balance on a credit card, there is—thankfully—an easy way to lift the burden.

Here's how a balance transfer credit card can help you become debt-free quicker.

In a nutshell: how does a balance transfer credit card work?

A 0% balance transfer is a specialist type of credit card. If you apply for one of these cards and get accepted, you can transfer old debts to your new card. Anything you shift across will be interest-free for as long as the 0% period.

How much debt you can transfer will depend on the credit limit you are given on your new card. If you're lucky, your credit limit will be greater than your total credit card debt. If this is the case you'll be able to move across ALL of your debt at once.

However, if you're given a credit limit that is lower than your total debt, you'll only be able to shift across a proportion of your balance. If this happens to you take a look at our article that explains what to do if you're given a low credit on a balance transfer credit card.

Balance transfer credit card warning

Whenever the Bank of England raises interest rates, the cost of borrowing also goes up. Each time borrowing costs rise, 0% cards become less profitable for lenders. So, in a rising rate environment, there may be fewer balance transfer offers in the market, and they may be less attractive.

How can a balance transfer credit card cut what you owe?

A balance transfer credit card can be a valuable tool for cutting existing credit card debt. While you still have to repay any debt you shift across to a 0% balance transfer card, you'll stop paying interest on your balance for the duration of the 0% period. This means all of your repayments during the 0% period goes towards cutting down what you owe as opposed to servicing interest payments.

So, repay a decent chunk of your balance every month and you'll see your debt decrease far faster than it would have done if you were still paying interest. This means you could potentially find yourself £1,000s better off. For example, if you had £5,000 credit card debt on a typical, bog-standard credit card with 39.9% interest and only repaid the minimum each month, annual interest would be costing you close to £2,000! With a 0% card, interest payable on the same amount of debt would be slashed to zero. (So long as you stick to the rules of the card to keep your 0% promotional period.)

Can anyone get a balance transfer credit card?

To get your hands on a balance transfer card you must first be accepted. While acceptance criteria can vary massively between lenders, having a good credit score will almost certainly give you the best chance of grabbing the market-leading deals.

If your credit score isn't the best, take a look at our article for tips on how to boost your credit score.

Will an application harm my credit score?

Every time you apply for a credit card it gets recorded on your credit file—whether you're accepted or rejected. One or two of these marks is no biggie, and they're typically wiped after a year or so. However, if you make lots and lots of applications it's a different story. That's because multiple applications for credit may give lenders the impression that you're in financial trouble and desperate for credit. Therefore, it's best to avoid making subsequent credit card applications if you've already been rejected.

Instead, it's a good idea to use the services of a credit card eligibility checker. That way you can see what cards you're most likely to be accepted for before applying. With credit card eligibility checkers you only undergo a 'soft' credit search which lenders can't see. For more information, see our article that explains soft vs hard credit searches.

What are the best balance transfer credit cards out there right now?

The current market leader for longevity is the TSB Platinum Balance Transfer Card, which offers up to 38 months at 0% interest with a 3.49% transfer fee. For those looking for slightly lower fees, Barclaycard and Tesco Bank both offer a 36-month interest-free period with a 3.45% transfer fee.

For those looking to avoid transfer fees entirely, the market has tightened considerably. The best no-fee offer is currently from Barclaycard, offering up to 14 months at 0%. Other providers like NatWest, Virgin Money, and RBS typically offer shorter periods of around 12 months for fee-free transfers.

Balance transfer credit card deals change regularly. For a list of market-leading deals, plus the golden rules to follow with these cards, take a look at our best balance transfer credit cards guide.

Balance transfer card APRs (after promotional period)

It's important to note that the representative APR for major cards in this category, including TSB, Barclaycard, and Tesco Bank, is now 24.9% (variable). This is the rate you will likely be charged on any remaining balance once your 0% promotional period ends.

Remember that in order to keep your 0% interest period intact, you must strictly follow the lender's "golden rules," as even a minor slip-up can trigger a "Penalty APR" or cause the promotional offer to be revoked instantly.

The most common pitfall is missing a monthly minimum payment or being even a few days late, which lenders often use as a reason to void the agreement and revert you to a standard APR (often 24.9% or higher). Additionally, exceeding your credit limit is a major breach that can end your 0% deal immediately.

You should also be wary of using the card for "unintended purposes"; for example, if you have a 0% balance transfer card, using it for cash withdrawals, gambling, or buying foreign currency will not only incur immediate interest at a high rate but could also jeopardize the promotional status of your entire balance. Finally, pay close attention to the transfer window—most 0% offers require you to move your debt within the first 60 to 90 days of account opening; missing this deadline means you’ll miss out on the 0% rate entirely, even if the card is advertised as having a 38-month offer.