Balance Transfer Credit Cards

A balance transfer can cut £100s or £1,000s off the cost of existing borrowing. It's where you get a new credit card to pay off debts on old cards for you so you owe the new card but at a far lower rate; meaning you're debt free quicker.

The Five Golden Rules:

Before you do a balance transfer there are five things you need to know. Get this wrong and it can cost you large, so please read the following (even if you only have time to read and remember the headlines it should help protect your pocket).

1. Clear debts before 0% ends.

Always clear debt or shift again before the 0% or cheap rate ends, otherwise costs rocket.
Cheap balance transfer deals are designed to make lenders money when you fail to pay them off, or switch to a new 0% before the low rate ends. At that point, the interest rate jumps massively, to a standard 15%-20% APR.

2. Never miss a monthly repayment.

Repay AT LEAST the set monthly minimum (preferably more) or you may lose the cheap rate
Just because you grabbed a 0% deal, it DOESN'T mean you can get away with paying nothing – you must pay at least the minimum monthly payments. Otherwise you will be hit with penalties and some card providers will withdraw the deal, leaving you on an expensive rate.

3. Never spend or withdraw cash on these cards.

Don't spend or withdraw cash on cheap balance transfer cards. It's not usually at the cheap rate
Credit cards let you spend, shift debt or withdraw cash but banks must put repayments towards the most expensive debt first. So spending on a balance transfer card isn't as bad as it was, as repayments first clear the spending, but it can still cost, as you only avoid interest if you pay off the FULL balance, including transfers and purchases.

5. Know you may not get the deal you apply for.

Know 'up to' deals mean you might not get the headline deal you apply for.
There's a catch to watch out for. Some card firms give those with lesser credit histories fewer months at 0% than they advertise. You could, say, apply for a 38-month 0% balance transfer deal, be accepted but given a fewer 20 months at 0% – sometimes with a higher fee too.




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