15 December 2017 : 

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What is a balance transfer credit card?

Balance transfer credit cards are categorised as such because they offer customers the opportunity to move, or 'transfer', their existing balance from their current credit card issuer to another. People tend to do this because the interest rates available from the new credit card issuer are considerably lower than those they are paying to their existing credit card provider. Indeed many issuers offer introductory rates from 0%, for a limited period, when balances are transferred to them so the savings people can make by switching to the right 0% deal can be considerable.

How do I do a balance transfer on a credit card?

Typically the process for transferring a balance transfer can be started during the application for a balance transfer credit card. To do this you'll need your name, address, date of birth and card/account number from the credit card you wish to transfer the balance from. If you don't have those details to hand don't worry - many credit card issuers accept balance transfers to new cards for 90 days from account opening. However, most issuers start the introductory balance transfer period from the point at which the account is opened, so if you don't arrange your transfer until 90 days after account opening you'll effective miss out of almost 3 months at the introductory rate.

Can you do a balance transfer to your bank account/overdraft?

Many credit card issuers offer individuals the opportunity to transfer their balance to their bank account to reduce an expensive overdraft. The fees associated with this transfer tend to be marginally higher than those that would be incurred with a standard 0% balance transfer, but customers often find that the savings they can make more than offset the money transfer fee payable.

N.B. Rather than applying for a new credit card to undertake a money transfer it is often worth calling your existing credit card issuer to see whether they offer money transfer to customers. A number of issuers offer this facility and even though it can be costly, it is often cheaper than expensive overdrafts or other prohibitively expensive borrowing (like payday loans).

What credit card has the biggest limit for balance transfers?

Unfortunately there is no of telling which credit card issuer offers the biggest limit for balance transfers. What every issuer will offer an individual is decided at the time they offer a credit agreement, based on number of different factors. These include;
  • Credit Score
  • Employment status
  • Total indebtedness
  • The issuers own borrowing costs (which can change from day to day)
  • The specifics of the deal they are offering

...but there are numerous other factors that can also have a bearing on credit limits.

It is also worth noting that most issuers will only accept transfers up to around 90%-95% of a given credit limit - so an individual with a credit limit of £5,000 might only be able to balance transfer £4,500 onto their new card.

How do I calculate cost and savings from transferring my balance?

The easiest way to calculate the costs and savings available from transferring your credit card balance is by using a purpose built balance transfer calculator. Of course, to do this you will need to know your current borrowing costs and the amount you intend to balance transfer.

Click here to use our balance transfer calculator.

What does minimum balance transfer mean?

Most credit card issuers will require an individual transfers a minimum amount onto their new card. This is because the new credit card issuer themselves with have to pay certain overheads to arrange an account, print and post plastic cards, mail monthly credit card statements etc, and they will therefore want to ensure any business they accept offers them the opportunity to at least cover these costs.

What is a balance transfer fee?

A balance transfer fee (sometimes called an 'admin fee') is the amount customers have to pay to an issuer to transfer their balance to them. These fees tend to be expressed as a percentage of the total amount transferred and can range considerably - For example a balance transfer of £4,500 would incur fees of £135 if the balance transfer fee was 3%.

Most issuers will also require a minimum transfer fee is paid (normally between £5.00-£10.00) - so if a 3% balance transfer fee was charged, any balance less than £333.33 would still be charged £10.00 (assuming the minimum transfer fee was £10.00) even though the amount would be lower based on the percentage fee.

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