What is a 0% balance transfer card—and should you be moving your debt?

There can be so much jargon around banking it can be hard to make the right decision for your situation. Our expert financial journalist explains all you need to know about 0% balance transfer cards

Brightly coloured credit cards
(Image credit: Getty)

If you have mounting credit card debt, shifting this onto a 0% balance transfer card could be a wise move.

By using one of these cards, you’ll still owe the money, but you won’t pay a penny in interest during the offer period. 

Here we explain how these cards work, and what to watch out for. 

What is a 0% balance transfer card?

It’s a card that transfers money you owe from one credit card to another at 0% interest. This interest-free offer will last for a specific period of time, such as 12 or 18 months, but you may be able to get longer terms. You’ll then pay interest at the standard rate. 

Why use a 0% balance transfer card?

If you’ve built up debt on a standard credit card, you are probably paying 20% interest or more on the money you owe. Getting rid of this debt can be an uphill struggle, with interest racking up unless you can clear your balance in full. 

By moving your debt to a 0% balance transfer card, you avoid paying interest for a set period. This can be as long as two-and-a-half years, based on current deals. So you can use this time to gradually pay off your debt, and take a breather from interest charges. 

Make sure you use the card to wipe out what you owe, not for any further spending. You will get charged interest on purchases, unless you have a card that’s also 0% on purchases too. 

And make sure not to miss payments, or any gain could be wiped out with charges or even losing the 0% deal. Any missed debt repayments could also impact on your credit score. 

If you don’t think you’ll pay off your debt within the 0% period, make a note to apply for another balance transfer deal. 

What are balance transfer fees?

You will often pay a percentage of the debt you’re transferring as a fee. The typical fee is about 3%, and a minimum of £3. Some cards come with lower fees, but they may not be the best deals. 

For example, a 3% fee on a £3,000 balance is £90, but this may still be worth paying considering the savings you could make. So do your sums before applying for a card to make sure it is worth it. 


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How much can you save with a 0% balance transfer card?

If you have £4,000 on a credit card at 25%, for example, and you’re paying £200 back a month, it’d take you two years and two months to clear the debt and cost you a hefty £1,062 interest. 

But if you shifted this debt to a 0% card over 26 months and continued paying £200 a month, you’d pay no interest, saving £1,062!

If you pay a balance transfer fee at 3%, this amounts to £120—but you’d still put £942 back in your pocket. 

What’s the best way to use a 0% balance transfer card?

You should divide your debt by the offer period to benefit from the 0% deal. For example, if you’ve got a £2,600 debt and move this onto a 26-month 0% card, make sure your monthly payments will pay off your debt. So, that’s £100 every month. Or ideally, pay off as much as you can and wipe out your debt sooner. 

Can you get a 0% balance transfer card?

You’ll usually need a good credit score for a 0% deal. You can check what your credit score is for free, and which cards you might be accepted for by signing up to Clearscore, or Experian. Many credit card providers provide what is known as a “soft search” which tells you if you're likely to be accepted without leaving a footprint on your credit report.

If you have a low score, you could be offered a shorter 0% deal than the one advertised, so check the details carefully. 

Pros and cons of 0% balance transfer cards

Pros:

  • 0% interest on your debt for a specific time period, so you can pay down your balance without extra charges. 
  • You can combine your debts by shifting balances on a few cards onto a single 0% balance transfer card to make a single monthly payment.
  • Over time you may boost your credit score, as you’ll pay off your debt and hopefully take on less going forwards. 

Cons:

  • Balance transfer fees typically amount to 3% of the debt transferred. These may be worth paying, but you’ll have to do the maths. 
  • The interest rate you pay once the 0% offer has ended could be high, wiping out the card’s benefits if you don’t repay your debt in the offer period. Aim to pay off your debt in the time frame of the deal.
  • You may not be offered a big enough credit limit. So you may only be able to move some of your debt and need to apply for a few 0% cards. 
  • Applying for several new credit cards can damage your credit score, if you are subject to a hard search and rejected, for example. 

Top 0% balance transfer card deals

There are still some decent deals around, even with providers cutting their terms during the pandemic.

  • Santander is offering 31 months at 0% on its balance transfer card (2.75% fee). Once the deal ends, the rate is around 20.9% rep APR.
  • Sainbury’s Bank is offering up to 30 months at 0% (1.75% fee) on its card. The rate is 19.9% rep APR when the deal ends. But you could be offered 24 months instead, depending on the results of an eligibility check. 
  • Virgin Money is offering 27 months 0% (1.2% fee) on its card. The rate is 21.9% rep APR when the deal ends.