Credit card Guides

Compare 0% balance transfer credit cards

Updated: Wednesday 30 November, 2011

By Martin Fagan

We show you how to compare 0% balance transfer credit cards to make sure you get the best deal for your circumstances.

If you’re becoming a slave to unmanageable credit card debts then a 0% balance transfer credit card could ease the burden.

If you switch your balance to a 0% card all your repayments will go towards paying off the capital, rather than interest, and you’ll be able to pay off your debt quicker.

However, before you move an existing credit card balance to a new 0% card, there are three things you need to take into account - the balance transfer fee, the balance transfer period and he “revert-to” rate when the 0% period has finished.

• What Are 0% Balance Transfer Credit Cards?
• Balance transfer fees?
• Balance transfer periods
• The revert-to rate
• How much will I save with a balance transfer card?
• Is there anything else I should look out for?

What Are 0% Balance Transfer Credit Cards?

Balance transfer cards can be a great way to deal with credit card debt. They allow you to transfer your existing credit card debt to another card where, for a set period, you won’t have to pay any interest. The best balance transfer deals change all the time so, when you’re looking for a new card, it’s a good idea to check the best buy tables.

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Balance transfer fees

When 0% balance transfer deals first came on to the market a few years ago, so called “rate tarts” used the plethora of deals on offer to continuously switch between cards. By moving their balance every time a 0% deal came to an end and surfing their debt to another 0% deal, they never paid any interest.

Unfortunately, credit card firms wised up to this and started introducing balance transfer fees to deter people from continually switching cards once the promotional period ends. Balance transfer fees are usually a percentage of the balance you intend to transfer. So if you have a balance of £3,000 and the balance transfer fee is 3%, it will cost you £90 to switch.

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Balance transfer periods

The transfer periods will differ between cards. Some only offer as little as three months, but most deals are between six and 12 months. Every so often a card comes along with a 15 or 16 month balance transfer deal, which gives you a lot longer to pay off your debt before you start paying interest.

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The revert-to rate

If you don’t manage to clear your balance within the 0% balance transfer period, the debt will start incurring interest. It’s important to know the “revert-to” rate when the 0% period ends. This will be displayed in the summary box, which is part of the information you should receive when you take out a card.

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How much will I save with a balance transfer card?

Let’s look at a card which offers 0% on balance transfers for 12 months and has a balance transfer fee of 2.5%. If you transferred a balance of £4,578 (the average credit card balance, according to national charity Credit Action) to the card and paid the monthly minimum payment each month you would save £700 over a year compared to making the same payments on a card with an annual percentage rate (APR) of 13.9%.

Obviously how much you save will depend on how long the 0% balance transfer period lasts, the balance transfer fee, the rate you would be paying on an alternative credit card and how much you’re able to repay each month. If you just pay the minimum repayment it will take you a lot longer to clear the balance than if you made extra payments.

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Is there anything else I should look out for?

While credit card companies will dazzle you with enticing offers, it’s important to always remember that these are financial institutions and they need to make money from their customers.

Here are a few traps to avoid:

• Make sure you clear your debt before the promotional period ends. If you can’t, then transfer any remaining balance to another 0% interest introductory deal (you’ll have to pay another fee, though).


• Balance transfer deals are often only open to new customers. Even though the cards may have a different name on them, if they are owned by the same bank or banking group, you may not be able to switch between the two.


• Watch out for a minimum monthly spend clause. If you fail to spend the minimum amount each month then you’ll be subject to standard interest rates.


• Never use your credit card for cash withdrawals. Balance transfer card or not, you’ll be paying a hefty sum of interest for cash withdrawals.


• Don’t apply for too many credit cards in a short space of time, 0% balance or otherwise. Having a long history of credit card applications on your credit file will have a negative impact upon your credit rating, particularly in this era of “credit crunch”. Read the Creditchoices.co.uk guide to understanding your credit score for more on this.

If you’re tempted to continue spending having transferred your balance to a new card, then cut the card up immediately. Self-discipline is a vital ingredient in the clearing of outstanding balances. Also bear in mind that although you’ll be charged 0% interest on balance transfers, purchases are charged at higher rates on 0% balance transfer cards and repayments won’t go towards purchases until you have paid off the transferred balance. This is called a “negative payment hierarchy” and, although a government white paper in July 2011 called for greater transparency in the credit card market, some card issuers still impose a negative payment hierarchy to boost their profits.

Compare 0% balance transfer credit cards to find the best deal for you.

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