A balance transfer is worth it when the one-off transfer fee is smaller than the interest you would otherwise pay, and you can clear the balance (or most of it) before the 0% period ends. For a typical card debt of a few thousand pounds that you will take more than a few months to repay, the saving can be hundreds of pounds. For a small balance you can clear quickly, the fee can cost about as much as the interest.
This guide shows how to run the numbers, how much to pay each month, and the mistakes that cancel out the saving. For a general overview of how balance transfer cards work, see our balance transfer cards guide.
How a balance transfer works
You apply for a new credit card with a 0% (or low) introductory rate on balance transfers, and the new provider pays off your existing card. You then owe the new provider the balance plus a transfer fee, usually a percentage of the amount moved. During the promotional period no interest is charged on that balance, so every payment reduces the debt. When the period ends, any remaining balance moves to the card's standard rate.
Most offers only apply to transfers made within a set window after opening the account, often the first 60 or 90 days, and you usually cannot transfer between cards from the same banking group.
Run the numbers: an example
Take £3,000 on a card charging an example 24.9% APR, and compare staying put with moving it to a card charging a 3% fee and 0% for 24 months. In both cases you pay £128.75 a month, the amount that clears the transferred balance in exactly 24 months.
| Option | Time to clear | Cost of borrowing |
|---|---|---|
| Stay on 24.9% APR | 31 months | about £977 interest |
| Transfer: 3% fee, 0% for 24 months | 24 months | £90 fee |
| Saving from transferring | 7 months sooner | about £887 |
These figures are illustrations; your own rate, fee and offer will differ. Plug your numbers into the credit card payoff calculator to see how long your current balance will take at your current payment.
Now a small balance: £600 at the same 24.9% APR, paid off at £200 a month, takes 4 months and costs about £23 in interest. A 3% fee would be £18, so the saving is just a few pounds and not worth a credit application.
Work out the monthly payment that clears it in time
The single most useful number is: (balance + fee) ÷ months at 0%. That is what you need to pay each month to be debt-free before the rate jumps.
| Balance plus 3% fee | 0% for 12 months | 0% for 24 months |
|---|---|---|
| £1,545 (on £1,500) | £128.75 | £64.38 |
| £3,090 (on £3,000) | £257.50 | £128.75 |
| £5,150 (on £5,000) | £429.17 | £214.58 |
Set up a direct debit for this amount, not just the minimum. Minimum payments on a 0% card can be very low, which makes it easy to reach the end of the offer with most of the debt still there.
Before you apply
- Use eligibility checkers. They use a soft search to show your chances of acceptance without affecting your credit file. Each full application leaves a hard search, so do not apply for several cards at once.
- Check the credit limit you are offered. You may be accepted for less than your full balance. Moving part of it still helps; focus your spare money on what is left at the high rate.
- Compare the total cost, not just the length. A longer 0% period with a higher fee only beats a shorter, cheaper one if you actually need the extra months.
- Read the rates after the offer. Know the standard rate the balance will revert to, and the rate on any new purchases.
Mistakes that cancel out the saving
- Missing a payment. Most providers can withdraw the 0% rate if you pay late or go over your limit, and you may be charged a fee. A direct debit prevents this.
- Spending on the new card. New purchases may be charged interest at a different rate. Keep the balance transfer card for the debt only.
- Running the old card back up. Moving the debt does not fix the reason it built up. Consider lowering the old card's limit, or closing it if you know you will be tempted.
- Forgetting the end date. Put the date the offer ends in your calendar, and review the balance three months before. If some remains, you may be able to transfer again, but that depends on your credit record at the time and another fee.
If a balance transfer is not an option
If you are turned down, or the debt is too large for one card, there are other routes. A personal loan at a lower rate than your card fixes the payment and end date; the loan calculator shows the cost. You can also ask your current provider for a lower rate or a repayment plan.
If you have been paying more in interest and charges than off the balance for a long time, card providers must contact you under FCA persistent debt rules and help you repay faster. If you are struggling to keep up with payments, free debt advice from StepChange, National Debtline or Citizens Advice is a better first step than more credit. The debt payoff calculator can help you plan a route out across several debts, and our guide to paying off credit card debt fast has more strategies.
After the debt is cleared
Once the balance is gone, keep paying the same monthly amount, but into a savings account. You are already used to living without that money, so it is the easiest savings habit you will ever build. A small emergency fund stops the next unexpected bill from going back on a card, and SYM can help you keep the habit going day by day.
Frequently asked questions
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