What is a balance transfer on a credit card?

Two credit cards depicting a balance transfer

Updated:Apr 1, 2026

4 min read

A balance transfer is where you move your balance (money that you owe) from one or more existing credit cards to a new balance transfer card. This new card typically has a low or 0% interest rate for a set promotional period, which can help you save money. When the promotional period ends, the regular purchase interest rate kicks in.

What does a 0% balance transfer mean?

When a card offers 0% on balance transfers, it means you won't pay any interest on the debt you move across during the promotional period. All your monthly payments go directly toward reducing the balance, rather than covering interest charges.

But remember, the zero interest period will come to an end. In order to avoid paying interest entirely, once the promotional period ends (which can vary depending on the card issuer), you would need to pay off your balance in full each month.

How does a balance transfer work?

Let’s look at a hypothetical example in action.

The scenario:

Current debt: £1,200
Current interest rate (APR): 39.9%
New offer: A balance transfer card with 0% interest for 6 months and a 3% upfront fee.

Option 1: Staying with your existing card

If you only make the minimum payments on your current card, you'd pay roughly £435 in interest over the first year.

How we got that number: While the annual rate is 39.9%, the bank actually charges you interest every single month. They divide that annual rate into a monthly charge of about 3.33%.

In the first month, they charge 3.33% of your £1,200 (which is £39.96). As you make payments, your debt goes down, so the interest charge gets a tiny bit smaller each month. Added up over a year, those monthly charges total about £435. Find out more about how credit card interest works.

Option 2: Using a 0% balance transfer

If you move your debt to a new card, you pay a one-time 3% fee of £36 (3% of £1,200) and £0 in interest for the first 6 months.

If you managed to pay off the total balance within this period, you could save roughly £399 (£435 – £36 in fees).

What happens when the 0% period ends?

After the 6-month 0% period, any remaining balance would start being charged at the purchase rate (we’ll use a 39.9% APR variable in this example, too).

If you had £350 left to pay at the end of the 6 months, you could pay roughly £60 in interest over the next 6 months as you work to clear that final amount.
So, your total cost for transferring (including the £36 fee and estimated £60 interest) would be about £96.
That means you could save roughly £339 (£435 – £96) compared to paying £435 in interest on your old card.

Of course, this example is for illustration purposes only and actual charges can vary according to your payments and balance.

The key takeaway here is to:

Pay off your total balance within the promotional period if you can afford to do so.
If you don’t think you can pay off the balance within the promotional period, use your personal APR and balance to work out if you’d still end up saving money.

What is a balance transfer fee?

A balance transfer fee is a one-off charge that your new credit card issuer charges when you transfer your debt over to your new card.

It is usually a small percentage of the transferred balance (i.e. 2-4%), with a set minimum fee (i.e. a £3 minimum fee).

For example, if you transferred £500 of debt and the balance transfer fee was 3%, you'd pay a one-off fee of £15 (3% of £500).

It's something to keep in mind before you transfer your balance - does the money you'll save in interest outweigh the fee?

Balance transfer FAQs

What is the downside of a balance transfer credit card?

The main risks are the one-off transfer fee and the interest rate that kicks in if you don't clear the balance before the 0% period ends.

A balance transfer only saves you money if you pay down the balance during the 0% period. If you still have debt when the promotional period ends, you'll start paying interest at the card's standard rate. Depending on how that rate compares to your original card, this could end up costing you more than if you hadn't transferred.

Can I do a balance transfer if I have bad credit?

It depends on the card and your credit history. Some cards are designed for people with lower credit scores, though the credit limit offered may be lower and the promotional period shorter than cards aimed at those with good credit. Checking your eligibility before applying is a good idea, as it uses a soft search and won't affect your credit score.

How long does a balance transfer take?

Balance transfers can take a few days to process, depending on your application and lender. Keep making minimum payments on your existing card until the transfer is confirmed, to avoid any late payment charges or interest.

Can I transfer a balance from a card with the same provider?

No, you cannot transfer a balance between two cards issued by the same provider. The debt needs to move from one provider to a different one.

What happens if I don't pay off the balance before the 0% period ends?

Any remaining balance will start accruing interest at the card's purchase rate, which is typically much higher. It's important to know your promotional end date and aim to clear (or significantly reduce) the balance before then.

This blog is for informational purposes only and does not constitute financial advice. Please speak to a qualified financial adviser before making financial decisions.

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