What is a balance transfer credit card?
A balance transfer pays off existing cards or loans by transferring them to an alternative credit card account. Using a balance transfer credit card is a good way of monitoring your balance, transfers and payments all in one place. It is a way to move debt from one card to another card as you could save yourself from incurring fines.
If you take out a new balance transfer credit card, your new card provider will pay off your existing debt on behalf of you. You will then need to make payments to pay off the new card, and you should close the old account. Make sure you do entirely close the account as you may incur fees even though you are not using the old account.
Should I use one card for both balance transfers and purchases?
It is easier to manage your finances with one card, but you need to make sure that your one card does have long enough 0% deals for the balance transfers and purchases.
Are different types of balance transfers?
- 0% balance transfer – you could dramatically reduce the cost of your borrowing over a certain time period (usually between a few months to three years).
- Lifetime balance transfer – this will have a fixed interest rate until the debt has been paid off. This is instead of having just several months to pay off debt at 0%. This could work out cheaper if you are unsure of how long it will take to pay off your debt.
- Low fee balance transfers – If you are moving a large balance or you’re thinking of paying off the full amount, a low fee balance transfer could work out cheaper.
- Super balance transfer – a super balance transfer is when you send the funds you borrow to your bank account instead of an existing credit card. You are also able to use them to purchase or to pay off an existing overdraft or loan.
- Once you have figured out how long it will take to pay off your debt, choose the card which will be the cheapest way to repay your debt, bearing in mind that you will have to include the balance transfer fee.
Is the transfer instant?
It will depend on your provider; sometimes it will be next day transfer, or it could be within five working days. Set up a transfer a least one week before, so you do not incur any late payment fines or interest on the old card.
How much can I transfer?
It will depend on what your credit limit is on your card. Before you apply, check the T&C’s as some providers will only allow you to use 90% or 95% of your credit limit.
Can I transfer more than one balance?
Yes, you can transfer to more than one balance, but the total amount has to be within in the limit of your new card.
What happens when the promotional period ends?
Unless you have a selected a lifetime balance, your interest rate will increase quite significantly. If you haven’t managed to pay off the debt before the end of promotional period, you can always transfer to another 0% deal again but you will have to pay another transfer fee.