A credit card balance transfer means taking your outstanding debt on your existing credit card and moving it to another credit card which has better rates. This allows you to save money on the rate you are paying and be free of debt quicker.
It is common to move what you owe on your card to another card where there is 0% interest for 12 months allowing you to save money on your credit card bill. There is typically a transfer fee of 3-5% of your outstanding balance in order to switch cards but this may work out to be cheaper than your paying your current card rates.
There is sometimes a limit on the amount that you are allowed to transfer such as 95% but if the customer is able to get a zero percent interest rate, it is like having an interest free loan. As per usual, customers are required to set up a direct debit in order to make the minimum monthly repayments but transferring balances can turn out to be a very smart way to manage your credit card debt. It may also be possible to transfer your balance onto more then one credit card however your minimum payments are likely to be higher.
Our comparison table above features a number of top balance transfer credit cards from leading providers in the UK. At Quiddi Compare, we are always looking for the best deals and new providers so that our customers can get the best offers available. We encourage our customers to check the terms of each provider to find the best deal for them and once they have selected their favourite product, simply click on the ‘visit website’ button where you can apply directly with the credit card provider. Our service is completely free of charge and we will not take down any of your details and pass them onto third party companies.
The best balance transfer credit cards are those that have a lower rate than your existing credit card. Ideally, you want to find a card that has interest free introductory period because this will allow you to pay nothing back for a certain period of time. If you have a lot of outstanding debt, having that zero interest will allow you to pay off your debts sooner and get your finances in order.
Furthermore, balance transfer cards can help organize your debt in a more convenient way as you have the option to choose one single card or two cards. If you find that you have numerous cards, simply transferring the balance onto one card could save you money as you avoid numerous penalties for late repayment. By comparison, if you receive 0%, you may receive a higher rate against purchases. In this case, it might be worth getting two separate cards: one for purchases and one for a balance transfer if both facilities are used.
Customers must be wary of is that the interest free period may be an introductory period and is only temporary. This means that if the balance is not cleared within the specified time frame then high interest rates (15-20% APR) could be charged against the remaining debt. Some card companies may charge lower fees but offer a shorter interest free period. Alternatively, you can always transfer the balance to another credit card with 0% interest. It is important to weigh up the different options and think about how you are going to repay the things you put on credit in the long-term.
Individuals must make the minimum monthly payment in order for maintain a zero percent interest offer. If you do not make the minimum payments, very high penalties will apply.
Whether or not you are eligible for a 0% balance transfer credit card will also depend on your credit rating. Those individuals with higher credit scores who have demonstrated their ability to pay back loans and credit cards in the past will be more likely to achieve a 0% rate compared to those with bad credit. You can check your credit score for free by visiting our credit checks page. The credit checking companies we work with offer a free 30 day trial.
Individuals cannot do a balance transfer to a different card with the same company. It is therefore important to consider the other offers by other credit card providers that are available on our comparison table above.
Constant transferring the balance of your credit cards should not be seen as a long-term solution to debt problems. By repeatedly transferring your balance to new cards, it is known as ‘tarting’ and can have a negative impact on your credit score as companies believe that you are trying to avoid paying your debts. Simply because you have moved your outstanding balance to a card with zero interest does not mean that you have zero debts. Individuals need to find a way to manage their finances and arrange repayment to avoid falling into a debt trap.
Transferring balances should not be undertaken for the sake of lowering your debt. If you are having trouble repaying your credit card, you should speak to your provider to see if they have reduce the interest or offer you a repayment plan.