What is Balance Transfer Credit Card?

Full Definition

A balance transfer credit card allows a cardholder to move some or all of the outstanding balance owed on another credit card, or sometimes another type of debt, onto the new card, typically benefiting from a promotional period of 0% (or very low) interest lasting anywhere from a few months up to, in some cases, over two years, rather than continuing to pay the standard interest rate on the original card, which for many UK credit cards runs well above 20% APR. In exchange for the promotional rate, most balance transfer cards charge a one-off balance transfer fee, commonly around 1-3% of the amount transferred, deducted or added to the balance at the point of transfer; cards offering the longest 0% periods generally charge the highest transfer fees, so the total cost needs comparing across both the fee and the length of interest-free time, not the headline 0% rate alone. The key risk of a balance transfer card is that once the promotional period ends, any remaining balance reverts to the card's standard interest rate, which can be high, so the strategy only genuinely saves money if the cardholder has a realistic plan to clear the transferred balance (or transfer it again to a new 0% deal) before that happens; missing minimum payments during the promotional period can also cause the 0% rate to be withdrawn immediately under most card providers' terms. Approval for the longest, most competitive 0% balance transfer deals generally requires a good credit score, and available cards and their exact terms change frequently, so comparing current best-buy tables at the time of applying, and checking the total minimum repayment needed each month to clear the balance within the 0% window, is standard advice from debt charities and consumer finance guidance.

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