How balance transfers work

A balance transfer moves what you owe on one credit card onto another that charges no interest for a set period. With nothing building up, every pound you pay goes straight onto the debt instead of onto interest, so it can clear a balance much faster, as long as you treat the interest-free window as a deadline rather than a let-off.

Here is how the same £3,000 credit card debt plays out over the same period: left where it is on a card charging interest, against moved to a 0% balance transfer card with a 3% fee. Both columns assume you pay the same fixed amount each month.

Same debt, same monthly payment. Swapping interest for a small fee is the whole point of a transfer. These figures are estimates to show the shape of the saving; the real numbers depend on your card's rate, the fee and how fast you clear the balance.

What a balance transfer is

A balance transfer is a move that shifts a debt from one credit card to another. The new card pays off the old card's balance, so you no longer owe the old provider; instead you owe the new one the same amount, plus a small fee. The reason to bother is the deal that comes with it: the new card charges 0% interest on the transferred balance for a set period, often well over a year and sometimes two years or more.

That interest-free window is what makes a transfer powerful. Normally a chunk of every payment is eaten by interest before it touches the debt. With no interest building up, the full payment lands on the balance, so the debt falls faster for the same money. The catch is that it is a breathing space, not a discount: the debt is still there, and the clock is ticking on the 0% deal.

How to do one

You apply for a balance transfer card, and if you are accepted you tell it which balance to pay off, usually during or just after the application. Done right, the steps are simple.

• Check your balance and the rate you currently pay, so you know what the transfer is saving you.
• Compare deals on the length of the 0% period and the size of the transfer fee, and pick a card whose interest-free window is long enough to clear the balance.
• Apply, then ask the new card to transfer the balance from your old card. Most providers want this set up within the first 60 to 90 days for the 0% rate to apply, so do not leave it.
• Keep paying at least the minimum on the old card until the transfer shows as completed, then check the old balance has reached zero.

You usually cannot transfer a balance between two cards from the same bank, and the amount you can move is capped by the credit limit you are offered on the new card. If the limit is smaller than your debt, you can move part of it and leave the rest where it is.

The transfer fee

Almost every balance transfer charges a one-off transfer fee, a percentage of the amount you move, added to the new balance at the start. It is usually around 2% to 4%, so moving £3,000 typically adds somewhere between £60 and £120 to what you owe. You do not pay it separately; it simply becomes part of the balance you then clear at 0%.

Some cards advertise no transfer fee, but they tend to offer a shorter 0% period in return. The trade-off is worth doing the sum on: a slightly higher fee can be cheaper overall if it buys the extra months you need to clear the balance without interest. The fee is almost always far less than the interest you would pay by leaving the debt where it is.

A worked example

Say you owe £3,000 on a card and move it to a 0% balance transfer card with a 3% fee. The fee is £90, so your new balance is £3,090, all of it interest-free for the deal period. Pay it off across that window and the whole debt costs you £90 on top of the £3,000 you borrowed.

Leave the same £3,000 on a card charging interest and, paying the same amount each month, it might cost you somewhere around £790 in interest over a similar stretch. So the transfer turns roughly £790 of cost into about £90, a saving of around £700, give or take. These are illustrative estimates to show the mechanic, not a quote; your own numbers turn on the rate, the fee and how quickly you repay. You can put your real balance and rate into our credit card repayment calculator to see what the interest would cost you, then weigh it against the fee.

The 0% period and the revert rate

The 0% only lasts for the set period, and what happens after it is the single most important thing to plan for. Any balance still on the card when the deal ends starts attracting the revert rate, the standard interest rate the card charges once the introductory offer is over, which is often high. The APR, or annual percentage rate, is the yearly cost of that borrowing including interest, and on the revert rate it can wipe out the saving you made.

So the plan is always to clear the balance before the 0% ends, or to transfer it again to a fresh deal if you cannot. Work out the monthly payment that finishes the balance inside the window: divide what you owe by the number of interest-free months and pay at least that. Two more things end a deal early. Paying late or missing a payment can cancel the 0% on the spot, and spending on the new card usually sits outside the offer and gets charged interest, so it is best kept for the transferred balance alone.

Money transfer cards

A money transfer card is a close cousin of a balance transfer card, but it does something a balance transfer cannot. Instead of paying off another credit card, it sends cash from the card straight into your current account, again at 0% for a set period. That money can then clear debt a balance transfer cannot reach: an overdraft, a personal loan, or any borrowing that is not on a credit card.

The mechanics are otherwise the same, with one difference that matters: the one-off fee on a money transfer is usually higher than on a standard balance transfer. That makes it worth doing only when you genuinely need the debt as cash rather than as a card-to-card move. If the debt you want to clear is already on a credit card, a plain balance transfer is almost always the cheaper route.

Transfer or personal loan?

Both can clear expensive card debt, and which wins comes down to the size of the debt and how fast you can repay it. A balance transfer is usually cheaper when the debt is on cards and you can clear it inside the interest-free period, because 0% beats any loan rate. There is no interest at all, just the one-off fee.

A personal loan can suit a larger debt that you need longer to clear, or when you would rather have one fixed monthly payment over a set term with no deadline hanging over you. A loan charges interest throughout, but the payment and the end date are fixed from the start, which some people find easier to stick to than a 0% deal they have to beat the clock on. If you are juggling several debts at once, our guide on how to pay off debt covers the order to tackle them in, and you can compare the cost of clearing them in our debt payoff calculator.

Effect on your credit score

A balance transfer pulls in a few directions on your credit score, and on balance, paid down steadily, it tends to help more than it hurts. Applying triggers a hard search, the footprint a lender leaves when it checks your file, which can dip your score for a few months. Opening a new account also lowers the average age of your accounts, another small short-term knock.

Pulling the other way, and usually more strongly over time, is your credit utilisation: how much of your available credit you are using, across all your cards. Moving a balance onto a new card with a higher limit lowers that percentage, which generally helps your score, and clearing the balance during the 0% lowers it further. The thing that does real damage is missing payments, so set up at least the minimum by direct debit even while you pay more on top. For the full picture of getting a card balance down, see our companion piece on clearing credit card debt, which covers why the minimum payment is a trap and how a fixed payment clears the balance far faster.

Common questions

How does a balance transfer work?

You apply for a new credit card that offers an interest-free deal, then ask it to pay off the balance on one or more of your existing cards. The debt moves across to the new card, usually with a one-off fee added on top, and you owe the same money but pay no interest for a set period. Every pound you repay during that window comes straight off the balance rather than going on interest.

Is there a fee for a balance transfer?

Most balance transfer cards charge a one-off transfer fee, usually around 2% to 4% of the amount you move, added to the new balance up front. So moving £3,000 at a 3% fee would add about £90. Some cards advertise no fee but tend to offer a shorter interest-free period in return, so weigh the fee against how long you actually need.

Do balance transfers hurt your credit score?

Applying triggers a hard search, a footprint a lender leaves when it checks your file for credit, which can nudge your score down for a few months. Opening a new account also lowers the average age of your accounts. Against that, moving a balance onto a card with a higher limit can lower your overall credit utilisation, the share of your available credit you are using, which usually helps. Paid down steadily and on time, a transfer is more likely to help your score than harm it.

Is a balance transfer a good idea?

It can save a lot of interest if you use the interest-free window to actually clear the balance rather than just park it. The deal works when the fee is smaller than the interest you would otherwise pay, you set a payment that finishes the balance before the 0% ends, and you avoid spending on the new card. It works against you if you only pay the minimum and let the balance roll onto the revert rate at the end.

Is a balance transfer better than a personal loan?

A balance transfer wins when the debt is on credit cards and you can clear it inside the interest-free period, because 0% beats any loan rate. A personal loan can suit a larger debt you need longer to repay, or when you want one fixed monthly payment over a set term with no deadline to beat. The right answer depends on the size of the debt and how fast you can realistically pay it off.

What is a money transfer credit card?

A money transfer card moves cash from the card into your current account, rather than paying off another card. That cash can clear an overdraft, a loan or any other debt a balance transfer cannot reach. The trade-off is a higher one-off fee than a standard balance transfer, so it is worth it only when you genuinely need the money as cash rather than as a card-to-card move.

What happens when the 0% period ends?

Whatever is left on the card switches to the revert rate, the everyday interest rate the deal was holding off, and that rate is often steep. So a balance you have not cleared can suddenly cost as much to carry as the card you moved it from. Slipping up earlier, by paying late or missing a payment, can also cut the 0% short before its end date. The plan is to finish the balance, or line up another transfer, while the interest-free window is still open.

About this article

Written by the calcd team. We build UK money calculators and explain the numbers behind them in plain English. We checked this article against MoneyHelper and the Financial Conduct Authority. The example figures come from our own credit card model and are illustrative estimates to help you plan, not financial advice. Real cards vary their transfer fees, the length of the 0% period and the revert rate, so confirm the terms with your provider or a qualified adviser before you apply. Last updated June 2026.