Ditch your debt with a balance transfer card

Spending on credit cards has become more and more common and 64% of UK adults now have at least one credit card, according to the UK Payments Administration. But there are good and bad ways to use this borrowing facility.

One of the best ways to avoid unnecessary charges after racking up debt is by using a credit card with a 0% balance transfer period. There are now nearly twice as many credit cards offering 0% balance transfer deals compared to five years ago.

But how do these cards work, and what should you watch out for?

What is a 0% balance transfer card?

If you have built up debt on a credit card that is charging you interest it's possible to transfer this money onto a 0% balance transfer card.

This would charge you 0% interest on the balance (but not on new spending unless it's a 0% purchase card) for a set period of time. This means that every little bit you pay off would go towards repaying the initial debt instead of being eaten up by interest charges.


How long are most 0% balance transfer periods?

There are an increasing number of lengthy 0% balance transfer deals on the market. They typically last for between 14 and 20 months but the best one is currently offered by Barclaycard for 21 months.

Check out our latest round-up of the top credit card rates

How do I qualify for one?

The best deals are for new customers and especially those with a good credit rating. Many card providers will automatically reject you if you already have one of its products, or if you have had one in the past 12 to 18 months.

Before applying, make sure you are confident you will be eligible by checking your credit record with a company such as Experian.

When you apply for a credit card the provider will check your record - but doing this will leave what is known as a 'footprint' on your record. Too many footprints can have a negative impact on your credit score, and might damage your chances of being approved for a mortgage, loan or credit card down the line.

What are the costs involved?

You will have to pay a fee to transfer money from an existing credit card, usually around 3%. Some providers also have a minimum amount you must transfer. When choosing a card, work out if the fee is worth paying in relation to the amount of interest you're already paying.

Can I use the balance transfer card for more shopping?

Not all 0% balance transfer credit cards are interest-free for purchases as well. If you intend to use your card for further shopping (instead of just repaying the debt), opt for a card that offers 0% on balance transfers as well as on purchases.

What should I watch out for?

When the introductory period ends you may be hit with higher-than-average interest rates so try and pay off your debt before the period ends. If this is not possible, check whether you can move the debt over to another 0% balance transfer card.