Credit Card Guides

How balance transfer cards work

Balance transfer cards explained:

These cards are great options for those that are looking to get any credit card debt on another card under control. Essentially, these cards allow you to move debt from a card (on which the debt is racking up interest charges) to a new card for a small fee. In return, the new card offers a substantially lower interest rate than the previous card. In many cases there will be a 0% rate of interest on the new card for a set period, giving more flexibility to resolve the debt while keeping it from increasing as you try to pay it off.

Drawbacks and things to keep in mind

Its worth bearing in mind that there is often a limit to how much you can transfer – meaning that you may not be able to resolve an entire bad credit card debt in one go. As always, there are requirements in terms of credit score that need to be met, so some of the best balance transfer cards may not be available. Furthermore, it’s worth bearing in mind that you can’t do a balance transfer within the bank or banking group – for example a balance transfer to a Lloyd’s card from a Bank of Scotland card.

Finally, it’s worth remembering to check the fees involved. Most won’t charge an annual fee but some will. Furthermore, it’s worth checking the interest rate you will be charged in the event that you cannot pay off the amount within the interest-free period. Charges could also be involved in the event that you cannot stick to the payment schedule or miss a minimum repayment. And there will definitely be an initial fee involved, around 3% of the amount transferred, but this will in almost all cases be less in the long-run than the amount that would have accrued on the previous card.

Benefits of balance transfer cards

A good balance transfer card allows you to get credit card debt under control in a very transparent way – it’s much easier to manage a debt that is not accruing interest and charges. Aside from this, of course, they reduce the amount you have to pay when used correctly. This is particularly the case with 0% balance transfer cards. This can also help your credit score a lot in the long run.

Purchase and balance transfers

For some, a combination balance transfer and purchase card is a good option if you’re looking to manage a credit card debt while also intend to make large purchase (and intend to avail of the extensive protection credit cards offer for purchases). While there will probably be a different interest-free period for both the purchase and balance transfer functions (which can be tricky to manage since there are two different rate periods to keep an eye on), they offer extensive flexibility to effectively take care of a credit card debt and get an interest free short term loan for a large purchase at the same time.

While you could probably get a better deal overall with a separate balance transfer and purchase card, there is a lot to be said for managing both on the one card. Of course, there will also be a limit to the amount of the purchase you can make interest free on the card.


These cards are a great way to get a credit card debt under control, and as such are usually worth the fees involved. But be aware of the fees involved, especially the fees that start after the interest-free period ends.