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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 called 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. This balance transfer helps the customer to pay no interest on their outstanding debt, during the 0% offer period.

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 29 months, means that the customer will pay no interest on the amount transferred during this promotional 29 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. As an example, a £2,000 balance transfer with a 3% fee would result in a £60 fee being charged.

There are a very small number of no fee balance transfer credit cards currently available in the UK.

Balance Transfers Explained

An example:-

Lets assume that Mrs Smith currently owes £3,000 on her existing Barclays balance transfer credit card. This card 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. She now owes the £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. As a result the customer can also pay off the debt faster. This is because 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

HSBC Balance Transfer*
HSBC Balance Transfer*
Balance Transfers:
0% for 29 months
Balance Transfer Fee:
2.75%
Purchases:
0% for 3 months
Representative APR:
21.9% APR (variable)
More Information >

Card Details

HSBC Balance Transfer*
  • 0% interest for 29 months on balance transfers made within first 60 days of account opening
  • 2.75% balance transfer fee applies (minimum £5)
  • 0% interest on purchases for 3 months from account opening
  • At end of promotional period, balance transfers and purchases will revert to standard variable rate
  • Worldwide offers and discounts with HSBC home&Away
  • Manage your card online
  • Annual Fee: None
More Information >

Application Criteria

HSBC Balance Transfer*
  • You have an annual income or pension before tax of £6,800 or more
  • You are a UK resident
  • You are aged 18 or over
  • You do not hold an HSBC Basic bank account
More Information >
Representative Example: 21.9% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 21.9% p.a. (variable)
Credit is subject to status, affordability and applicable terms and conditions
No balance transfers allowed to this card from first direct, HSBC, M&S or Partnership credit cards

Card Offers

Post Office Classic
Post Office Classic
Balance Transfers:
0% for up to 12 months
Balance Transfer Fee:
2.9%
Purchases:
0% for up to 12 months
Representative APR:
34.9% APR (variable)
More Information >

Card Details

Post Office Classic
  • 0% on balance transfers for up to 12 months
  • 2.9% balance transfer fee
  • 0% on purchases for up to 12 months
  • Credit limit up to £8,000
  • Online account management
  • Annual Fee: None
More Information >

Application Criteria

Post Office Classic
  • You are a UK resident
  • You have a bank or building society account
  • You are aged 18 or over
More Information >
Representative Example: 34.9% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 34.9% p.a. (variable)
No balance transfers allowed to this card from Capital One or Post Ofice credit cards

Card Offers

M&S Transfer Plus*
M&S Transfer Plus*
Balance Transfers:
0% for 29 months
Balance Transfer Fee:
2.75%
Purchases:
0% for 3 months
Representative APR:
21.9% APR (variable)
More Information >

Card Details

M&S Transfer Plus*
  • 0% for 29 months on balance transfers made within 90 days of account opening
  • 2.75% balance transfer fee, minimum £5
  • 0% on purchases for 3 months from account opening
  • Collect M&S points every time you shop anywhere in the world with your card
  • One point for every £1 you spend in M&S and one point for every £5 you spend elsewhere
  • Manage account online
  • Annual Fee: None
More Information >

Application Criteria

M&S Transfer Plus*
  • You are a UK resident
  • You have an annual income or pension of at least £6,800
  • You are aged 18 or over
  • You have not held a credit card with M&S Bank within the previous 12 months
More Information >
Representative Example: 21.9% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 21.9% p.a. (variable)
No balance transfers allowed to this card from first direct, HSBC, M&S or Partnership credit cards

Card Offers

HSBC Purchase Plus*
HSBC Purchase Plus*
Balance Transfers:
0% for 18 months
Balance Transfer Fee:
2.9%
Purchases:
0% for 18 months
Representative APR:
22.9% APR (variable)
More Information >

Card Details

HSBC Purchase Plus*
  • 0% interest for 18 months on balance transfers made within first 60 days of account opening
  • 2.9% balance transfer fee applies (minimum £5)
  • 0% interest on purchases for 18 months from account opening
  • At end of promotional period, balance transfers and purchases will revert to standard variable rate
  • Worldwide offers and discounts with HSBC home&Away
  • Manage your card online
  • Annual Fee: None
More Information >

Application Criteria

HSBC Purchase Plus*
  • You have an annual income or pension before tax of £6,800 or more
  • You are a UK resident
  • You are aged 18 or over
  • You do not hold an HSBC Basic bank account
More Information >
Representative Example: 22.9% APR representative (variable). Based on an assumed credit limit of £1,200 and a purchase rate of 22.9% p.a. (variable)
Credit is subject to status, affordability and applicable terms and conditions
No balance transfers allowed to this card from first direct, HSBC, M&S or Partnership credit cards

Card Offers

Co-operative Bank Balance Transfer
Co-operative Bank Balance Transfer
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 interest free balance transfer credit card to save money.

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

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Published: December 21, 2018, Updated: November 10, 2021 by Balance Transfer Expert

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