A balance transfer moves debt from one credit card to a new card that charges 0% interest for a set time. Every payment you make during that time goes straight off what you owe. Done well, it can save hundreds of pounds. Done badly, it just moves the problem.
How a balance transfer works
- The 0% period: UK deals currently run from around 12 months up to about 38 months.
- The transfer fee: most cards charge a one-off fee of roughly 3% to 3.5% of the amount you move, added to your new balance. Shorter deals sometimes have no fee.
- The rate afterwards: when the 0% ends, any balance left starts charging the card's standard rate, often around 25%.
- The transfer window: you usually need to make the transfer within the first 60 to 90 days to get the 0% rate.
A worked example
Say you owe £4,000 on a card at 24.9% and can pay £200 a month.
| Stay on your card | Transfer to a 0% card | |
|---|---|---|
| Fee | £0 | £120 (3%) |
| 0% period | none | 20 months |
| Monthly payment | £200 | £206 |
| Time to clear | 2 years 3 months | 1 year 8 months |
| Interest and fees | about £1,220 | £120 |
Here the transfer saves about £1,100 and clears the debt seven months sooner. The key is the payment: £4,120 ÷ 20 months = £206, so the whole balance is gone before the 0% ends.
Try your own numbers in the free balance transfer calculator to compare staying put with a transfer.
The simple rule
Divide your new balance, including the fee, by the number of 0% months. If you can afford that every month, a transfer is very likely worth it. If you can't, check what would be left when the 0% ends, and what that would cost at the card's normal rate.
When it isn't worth it
- Small balances you'll clear soon anyway. On a few hundred pounds you'd pay off in a couple of months, the fee can cost more than the interest you'd save.
- If you'll keep spending. New purchases on the new card usually aren't 0%, and spending on the old card means you now owe on two cards.
- If you only pay the minimum. The minimum on a 0% card is small. If that's all you pay, most of the balance will still be there when the rate rises.
- If you can't get the full deal. Many cards are advertised "up to" a 0% length, and some people are offered less, or a lower credit limit than the balance they need to move.
Tips to make it work
- Check eligibility first with a soft-search tool, so a rejection doesn't leave a mark on your credit file.
- Keep paying your old card until the transfer has fully gone through.
- Set up a direct debit for your calculated amount, not the minimum. Missing a payment can end the 0% deal early.
- Put the 0% end date in your calendar, and plan to have the balance gone a month before.
- Check your old card once more after the transfer for any leftover interest, and clear it.
Already using Zero Debt? Add the card's promo rate and end date to the account, and your payoff plan will warn you if the balance won't be cleared in time.
The example assumes a fixed 24.9% rate with monthly interest, no new spending and a 3% transfer fee added to the balance. Real deals vary. This guide is general information, not financial advice.