Credit Cards GB

Credit Card Balance Transfers

'Balance Transfers’ is a term mentioned in virtually every credit card advertisment. But what exactly is a balance transfer, and how does it affect you?

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A balance transfer can be described as the moving of outstanding debts that a consumer has on their current credit card to a new one. When this happens the new credit card provider pays off the money owed to the previous company, though the amount in debt you are will stay the same. The only differnce being that you will be paying it back on your new credit card. But whats the purpose of carrying out a balance transfer, if you still have to owe the same amount?

There are so many credit card companies competing for your custom that they need to offer incentives so that you will switch to their card. A popular measure is to offer a 0% interest rate on all balance transfers. So, if you have outstanding debts on your current credit card you will almost certainly be paying a high rate of interest, often as high as 18%, on that amount. By moving your debts to a new card you are automatically saving on interest payments due to the 0% APR on the balance transfer.

Swapping from a large APR credit card to one without an interest rate may seem to good to be true, but the credit providers are keen to get your custom and hopefully keep it in the long run. Therefore they are willing to take this risk and bear the brunt of these costs.

Changing credit cards does come with its fair share of pitfalls. One area that may prove to be a problem is the term of the zero percent offer – if it is a fixed term then you will need to be sure that you can pay off the amount within that period. Else ensure that the standard APR is as low as your current card’s rate. Other credit cards offer zero percent interest on the life of the balance, meaning that you will only have to pay the amount transferred – although we recommend that you check what the provider means by ‘life of the balance’ as there may be restrictions on this.

We also recommend that you check if there are any charges related to the balance transfer. Though the APR may be zero on your new credit card, this does not necessarily mean that your transfered balance will not incur other surcharges. Therefore, it is important that you thoroughly check the small print, and be sure to aquire a complete listing of all the costs involved from your card supplier.

If you are looking to transfer to another credit card, then take a look at the list of credit card companies that we have compiled for you.

If you are looking for a loan as an alternative to a credit card then we recommend that you visit Loans UK.