Balance Transfers Explained

How are balance transfers explained? How are balance transfer credit cards explained?

Here at Balance Transfer Expert we aim to explain all about balance transfers and balance transfer credit cards in as plain and simple language as we can.

Balance transfers have become more and more popular over recent years with UK credit card customers looking to save money.

Balance Transfers Explained

The process:-

Balance Transfers Explained

A balance transfer occurs when a credit card customer moves the outstanding debt on their existing credit card, to a new credit card.

This process of moving the existing debt from one credit card to another is what is known as a balance transfer.

When a balance transfer is made, the new credit card company pays the debt to the old credit card company. After the transfer, the customer then has a debt with the new card company, often at a lower or 0% interest rate.

Balance Transfer Credit Cards Explained

Why do a balance transfer?

Most balance transfers occur because a credit card customer wants to save money by paying no interest on their outstanding debt.

By making a balance transfer from an existing credit card which has a high rate of interest, to a new credit card with a 0% rate of interest, the customer can save large amounts of money.

A new credit card that offers an introductory 0% interest on balance transfers for as long as 28 months, means that the customer will pay no interest on the amount transferred during this promotional 28 month period.

Most balance transfers are made when a credit card customer applies for a new credit card offering a 0% balance transfer deal for an introductory period.

Balance Transfer Fee Explained

Are there any fees when making a balance transfer?

Balance Transfer Credit Cards Explained

In most cases a balance transfer fee will be charged by the credit card company you transfer the balance to.

You only pay this fee to the credit card company you transfer to. No fee is charged by the credit card company you transfer from.

The balance transfer fee is charged as a percentage of the amount you balance transfer so as an example, a £2,000 balance transfer with a 3% fee would result in a £60 fee.

Balance Transfers Explained

An example:-

Lets assume that Mrs Smith currently owes £3,000 on her existing Barclaycard credit card that has a 18.9% interest rate and she pays it off at £110 a month.

  • Mrs Smith then applies for a new credit card with 0% for 28 months on balance transfers with a 1.5% fee
  • Mrs Smith asks the new credit card company to make a balance transfer to Barclaycard for the full amount as part of her application
  • The new credit card company will then pay Barclaycard the £3,000

Now Mrs Smith has a £0 balance left on her Barclaycard and she now owes £3,000 to the new credit card company.

  • Mrs Smith will pay no interest on her £3,000 debt for the 28 months of the 0% balance transfer period
  • Mrs Smith will have to pay a £45 balance transfer fee to the new credit card company
  • Assuming the same £110 payment per month, Mrs Smith will save £760.41 over the 28 months by paying no interest over the 28 months

With a balance transfer a customer can save money by paying no interest during the 0% offer period and also pay off the debt faster, as all payments pay off the debt rather than going towards paying interest.

All of the following popular featured 0% credit cards currently offer 0% balance transfers:-


Balance Transfer Expert may receive commissions from some of the credit card companies that we refer users to. How this site works.

Card Offers

Balance Transfers:
0% for 28 months
Balance Transfer Fee:
2.75%
Purchases:
0% for 3 months
Representative APR:
19.9% APR (variable)
More Information

Card Details

NatWest Longer Balance Transfer
  • 0% on balance transfers for 28 months from account opening
  • 2.75% balance transfer fee
  • 0% on purchases for first 3 months from account opening
  • Lock and unlock your credit card in app
  • Manage your card 24/7 online and by telephone banking
  • Annual Fee: None
More Information

Application Criteria

NatWest Longer Balance Transfer
  • You are a NatWest customer
  • You are a UK resident
  • You are earning at least £10,000 per year
  • You are aged 18 or over
More Information
Only available to customers who have a current account, savings account, credit card or mortgage with NatWest
Representative Example: 19.9% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 19.9% p.a. (variable)
No balance transfers allowed to this card from NatWest, RBS or Ulster Bank credit cards

Card Offers

Balance Transfers:
0% for up to 28 months
Balance Transfer Fee:
2.95%
Purchases:
0% for 3 months
Representative APR:
19.9% APR (variable)
More Information

Card Details

TSB Platinum Balance Transfer
  • 0% interest for up to 28 months on balances transferred within first 90 days
  • 2.95% balance transfer fee during first 90 days, 3% fee applies afer 90 days
  • 0% interest for the first 3 months on purchases
  • Internet fraud protection and Clicksafe
  • Apple Pay and Android Pay
  • Annual Fee: None
More Information

Application Criteria

TSB Platinum Balance Transfer
  • You are an existing TSB customer
  • You are not currently declared bankrupt, have CCJs or subject to IVA
  • You have a good credit rating and regular income
  • You are a UK resident
  • You are aged 18 or over
More Information
Representative Example: 19.9% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 19.95% p.a. (variable)
No balance transfers allowed to this card from TSB credit cards

Card Offers

Balance Transfers:
0% for up to 20 months
Balance Transfer Fee:
3%
Purchases:
0% for up to 20 months
Representative APR:
20.9% APR (variable)
More Information

Card Details

Sainsbury’s Dual Offer
  • 0% interest on balance transfers for up to 20 months
  • 3% balance transfer fee, minimum £3 on transfers made at application
  • 0% interest on purchases for up to 20 months
  • Collect 2 Nectar points per £1 spent on Sainsbury's shopping and fuel
  • Collect 1 Nectar point for every £5 spent on your card elsewhere
  • Online account management
  • Annual Fee: None
More Information

Application Criteria

Sainsbury’s Dual Offer
  • You have a permanent UK address
  • You have not been declined for credit in the last month
  • You do not have a history of bad credit
  • You are aged 18 or over
More Information
To apply for a credit card you must be a Nectar member and should have been one for at least 6 months
Representative Example: 20.9% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 20.95% p.a. (variable)
No balance transfers allowed to this card from Sainsbury’s credit cards

Card Offers

Balance Transfers:
0% for 24 months
Balance Transfer Fee:
3%
Purchases:
0% for 4 months
Representative APR:
20.6% APR (variable)
More Information

Card Details

Co-operative Bank Balance Transfer
  • 0% interest for 24 months for balance transfers made within 60 days
  • 3% balance transfer fee, minimum £5
  • 0% interest on purchases for 4 months from account opening
  • All successful applicants will receive this exact rate and offer
  • Online account management
  • Annual Fee: None
More Information

Application Criteria

Co-operative Bank Balance Transfer
  • Only available to customers who have held a Co-operative Bank or smile current account for 1 month or more
  • You are a UK resident
  • You have annual income of £10,000 or more
  • You are aged 18 or over
More Information
Only available to Co-operative Bank customers
Representative Example: 20.6% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 20.6% p.a. (variable)
No balance transfers allowed to this card from Co-operative credit cards

In summary, balance transfer are best explained as the process of moving an outstanding debt from a high interest credit card to a new lower interest credit card to save money.

For further reading, Wikipedia, the online encyclopaedia’s definition of what is a balance transfer can be found here.


Related Content From Balance Transfer Expert:-