Credit Card Balance Transfers
Posted December 20th, 2008 and last modified January 11th, 2009Have you been spending too much recently? Is your credit card debt or store card debt looking a little scary? By changing credit cards regularly and transferring your balances, you can save £100s or even £1000s of pounds.
Read through our step-by step guide to learn how to start saving now! We’ll take you through the best tips and tricks to the banks taking all your money. We’ll also show you the best offers, updated daily, and tell you what to watch out for with balance transfer.
What is a balance transfer?
Balance transfer is when you transfer the outstanding balance from one card to another. This can save you money as the card you are be transferring too should have an interest free period. This means that you no longer have to pay of the interest the first card is charging you.
For example:
- Frank has a £2,000 debt on his Binkley’s bank credit card, which he is paying 20% interest i.e. £400 p.a.
- He opens up a new card with Capital bank, which has 0% for the first 12 months.
- He transfers the £2,000 from his Binkley’s card to his Capital Bank Card, saving himself £400 in the first 12 months
The best balance transfer deals are applied when you start a new card, as the banks want you to transfer your debt to them. However there are a few deals for existing customers that can be very handy when using existing credit.
There’s a big difference between cutting the interest rate and paying less money each month. The minimum repayments indicate the minimum monthly repayment amount.
How do I choose the right balance transfer deal?
There are many different factors which effect this decision, including your credit score and your ability to repay the debt.
- How do I transfer my outstanding credit card balance?
- Will I pay less each month?
- How much should I pay off?
- If I don’t reduce my payments by balance transfer, then why should I bother transferring my credit card balance?
- What should do if I can’t get enough credit to cover my existing debts?
- How will the credit crunch effect balance transfers?
- How many times can I transfer my credit card balance?
- When should I apply for a new balance transfer?
- Does changing credit cards regularly harm my credit rating?
- Can I spend money on my new credit card?
- Can I still not spend money on the new card if it’s got a cheap deal for spending too?
- Is the balance transfer fee interest free as well?
- Which cards give the largest credit limits?
- Why was I rejected? I’ve got a great credit score.
- Why did I receive a different card to the one I applied for?
- What else should I look for when choosing a credit card for balance transfer?
- What other risks do I need to think about when transferring outstanding credit card balance?
How do I transfer my outstanding credit card balance/s?
The first step is to apply for a new credit card. In the application, there will usually be a section which asks if ‘you want to transfer debts from other cards’. In this section, you should put the details of the cards that you wish to transfer the balance from. If the application is approved, the new institution will automatically pay off the original debts. If you don’t do it as part of the original application, most cards will allow you a period of grace of up to 90 days where you will be able to transfer outstanding credit card balances.
Does having a new lower interest rate mean I pay less each month?
Not necessarily, the minimum payment and the interest rates are separate issues. The minimum payment calculations vary from card to card.
How much of the credit card balance should I pay off each month?
You should pay off as much debt as possible. Even though you are not paying interest on the card, you should still work as hard as you can to get rid of the remaining debt. You need to make sure you’re paying more than the minimum payment each month as well.
If I don’t reduce my payments by balance transfer, then why should I bother transferring my credit card balance?
If the rate of interest is lower, more of your money goes towards paying off the original capital, rather than to the bank. This means that you’ll get out of debt faster.
What should do if I can’t get enough credit to cover my existing debts?
You should move what you can to the new card, and either apply for a second card, at the risk of having a damaging impact on your credit score, or accept the fact that you’re paying less interest than you were before.
How will the credit crunch effect balance transfers?
The credit crunch means that financial institutions are less willing to give credit, which means that it’s harder to transfer your balance. The risk is that as it becomes difficult to get higher credit limits, people will need to use multiple credit cards to cover all their debts. This means more risks, and also more applications, which can also have a negative impact on your credit score. The best solution for this is to look for one cheap, long term deal to ensure you have access to that rate for as long time as possible.
How many times can I transfer my credit card balance?
A. As many times as you like, you can balance transfer from card, to card, to card. The only limiting factor is whether your credit score is high enough to be accepted for new cards.
When should I apply for a new balance transfer?
The best time to apply is roughly six weeks before your current 0% deal ends. This gives you enough time to apply, find out if you’ve got the card, and shift the debt, while your other card is still at 0%. Use the Tart Alert to remind you when.
Does changing credit cards regularly harm my credit rating?
If you keep applying for credit cards, especially close together, especially when you have large outstanding debts, you are more likely to not get approved. The solution to this is to spread out your applications. If this is the case, most people with normal incomes and no missed payments should be able to transfer balances as they see fit.
Can I spend money on my new credit card?
NO! You should never spend money on a balance transfer card, as it means you’re incurring new debts which add interest.
Can I still not spend money on the new card if it’s got a cheap deal for spending too?
Practically, yes, realistically, no. Remember that the Financial Institutions want to make profit on your credit card, so it is highly unlikely that a card will have a low rate for both balance transfers and purchases. Even if they do, it’s likely that the lengths will be different e.g. 0% for 6 months on purchases and 12 months for balance transfers and you don’t pay off the debts in time, you’ll end up in the same place you were originally, with high debts at high interest rates.
Is the balance transfer fee interest free as well?
This varies card to card, usually you do pay interest, but it’s usually arranged so that your first monthly repayment covers this fee, which means the interest is negligible.
Which cards give the largest credit limits?
Reputation suggests that Barclaycard offers the lowest credit limits and MNBA offers the highest, but in
reality the amount differs wildly according to the financial institution’s profitability requirements at that time. There’s no practical way to accurately answer this question.
Why was I rejected? I’ve got a great credit score.
Lenders choose customers on profitability, not just risk. You should always check your credit file, but sometimes it’s hard to understand why a decision was made, unless you’re a bank manager.
Why did I receive a different card to the one I applied for?
Beware: Some credit cards companies will be offer you a card based on their credit score of you. This means that you can apply for one card, and get sent a different one, which may be completely unsuitable for you.
What else should I look for when choosing a credit card for balance transfer?
It is worth considering whether the card offers existing customer balance transfer deals This is a useful as it offsets the risk of being rejected due to a poor credit score.
What other risks do I need to think about when transferring outstanding credit card balance?
If you don’t shift all the debt in time you’ll end up paying the full APR (up to 30%) on all the outstanding debt. You will have undone all of your hard work transferring balance. It’s very important that you monitor your cards closely to avoid getting stung with debt.
If you can be strict with your balance transfers, you can ignore the APR as you should have either paid off the debt or paid off the debt by the time the interest free period is over.
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Comparison of Top 10 Credit Card Offers
| Credit Card | Card Details | Interest Rate | Cash Advance Rate | Balance Transfer Rate | Annual fee | Interest free days | ||
|---|---|---|---|---|---|---|---|---|
 Halifax All in One Credit Card |
The Halifax All in One credit card offers a great introductory rate, and is perfect for saving you money now as well as in the future. | 15.9% APR | 27.95% p.a. (variable) | 0% for 9 months | No Annual Fee | 59 Days interest free |
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 Virgin Credit Card |
As well as a great rate, the Virgin Credit Card comes with:
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16.6% APR (variable) | 27.9% p.a. (variable) | 0% for 16 Months (2.98% fee on balance transfers) | No Annual Fee | 50 days on card purchases |
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 Capital One Classic Visa |
This card is designed for people with bad credit ratings, this is why the rate is quite high. |
Typical 34.9% APR variable | 34.9% APR | 34.9% APR | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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As well as earning Flying Club miles which you can spend on brilliant rewards like flights, upgrades, car hire and more, a Virgin Atlantic Credit Card gives you up to 46 days interest free on card purchases. |
17.9% APR typical rate | 20.9% p.a. (variable) | 0% for 6 months (2% handling fee) | No Annual Fee | Up to 46 days on card purchases only. |
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The Virgin Prepaid MasterCard from Virgin Money is a prepaid Mastercard that you can add funds to, and use these funds for normal purchases. |
N/A | N/A | N/A | N/A | N/A |
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5% cashback on purchases in your first three months (up to £4,000 of spend). Thereafter, earn 0.5% on the first £3,500, 1% on £3,501 to £10,000, and 1.5% after £10,001. |
18.9% p.a. | 27.9% p.a. | 18.9% p.a | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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Vanquis Visa Card is designed for people with no credit history or who have previously had bad debt. Representative 39.9% APR (variable) |
Representative 39.9% APR (variable) | 39.9% | N/A | No Annual Fee | Up to 56 days on card purchases only |
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The award winning prepaid card with no credit check or bank account needed. | Funds in your Account will not earn interest | Prepaid only - N/A | Prepaid only - N/A | £59.40 p.a. (£4.95/month) | Prepaid only - N/A |
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