Balance Transfer Credit Cards: How They Work

A balance transfer card lets you move existing credit card debt onto a new card that charges 0% interest for a promotional period. Used properly, it can save you hundreds of pounds in interest while you clear the debt. Used carelessly, it can cost you more than staying put.

The basic mechanics

You apply for a new card and, once approved, ask the new provider to pay off your old card balance. Your debt moves to the new card, where it sits at 0% for the promotional period — typically anything from 12 to 30+ months depending on the deal and your credit file.

In exchange, you usually pay a one-off transfer fee, commonly 1–3.5% of the balance moved. A £4,000 transfer at a 2.5% fee costs £100 — added to the balance, so you start owing £4,100.

Is it worth it? A quick example

Say you owe £4,000 on a card charging 24% APR and you can afford £150 a month:

• Staying put: at roughly £80/month in initial interest, the debt takes about 3 years to clear and costs well over £1,000 in interest.
• Transferring: £4,100 balance (after the fee) at 0% for 24 months clears in about 27 payments of £150 — you pay £100 total instead of £1,000+.

The fee is only worth paying if the interest saved is bigger. For small balances you can clear quickly, a fee-free shorter deal — if you can get one — may be better.

The rules that catch people out

• Transfer window. Most deals only give the 0% rate on balances transferred within the first 60–90 days. Miss the window and you pay the standard rate.
• Same-group transfers are usually blocked. You typically cannot transfer a balance between cards issued by the same banking group — check who actually underwrites both cards.
• Minimum payments still apply. 0% does not mean pay nothing. Miss a payment and most providers can cancel the promotional rate entirely, reverting you to the standard APR.
• New spending is often not at 0%. Unless the card also has a 0% purchase offer, anything you buy on it accrues interest immediately. Some cards split the balance so repayments go to the cheapest debt last.
• The revert rate. When the 0% period ends, the remaining balance jumps to the standard APR — often 24–35%. Diarise the end date and either clear the balance or plan another transfer before it hits.

Before you apply

1. Use an eligibility checker first. These are soft searches that do not affect your credit file. A full application leaves a hard search, and several in a short period can hurt your score.
2. Do the maths on the fee. Longer 0% periods usually mean higher fees — do not pay for time you do not need.
3. Check the limit you might get. You will not know your exact credit limit until you are approved. If the limit is lower than your balance, a partial transfer still helps but leaves some debt on the old card.
4. Have a repayment plan. Divide the balance by the 0% months and set up a direct debit for at least that amount — the minimum payment alone will not clear the debt in time.

The honest caveat

A balance transfer is a way to stop paying interest while you repay debt — it is not a way to make debt disappear, and it only works if you stop adding to it. If your card debt is growing because your spending exceeds your income, a new card will not fix that. Free debt help is available from StepChange and National Debtline, and MoneyHelper has impartial guidance on managing credit card debt.

This guide is general information, not a recommendation or financial advice. We do not list live deals — check current terms with providers and on FCA-authorised comparison services.