What you should know about balance transfer credit cards

Find out what exclusions apply, the fees to watch out for, and the best options for people with poor credit scores.

A balance transfer credit card could help you save money on monthly credit card interest – but they’re not always a silver bullet for debt. For instance, you may not get offered the 0% period you need, and you may find you’re unable to transfer debt to the credit card you wanted. Here, Which? explains the eight things you need to know before applying for a balance transfer credit card.

How does a 0% balance transfer credit card work?

A 0% balance transfer credit card allows you to shift debt from expensive credit cards and freeze the interest for a set period – with some deals lasting up to 30 months.

This gives you the chance to pay off the debt faster, and reduce how much you spend on interest, as all of your payments during the 0% period will go towards the debt – rather than the debt and interest.

If you think a balance transfer credit card is right for you, take a look at what you need to know before you apply.

1. You won’t be able to transfer within the same company

Most balance transfer credit cards have exclusions when shifting debt from a credit card from the same financial institution.

However, this isn’t always easy to find out, as different brands may be owned by the same company – such as First Direct and HSBC.

To help with this, the table below features the major UK credit card providers and their transfer restrictions, ordered alphabetically by provider.

2. Some providers won’t transfer debt from American Express

You may have trouble switching the balance of an American Express credit card, as it’s not accepted by some providers.

We spoke to Dr Kat Arney, who was unable to shift the debt from her American Express British Airways credit card to a 0% Sainsbury’s Bank Balance Transfer card. This was despite Sainsbury’s Bank’s website stating it accepts most cards with an Amex symbol.

She told Which?: ‘I am furious as I would never have applied for the [Sainsbury’s] card if I’d known I wouldn’t be able to transfer from my Amex.

‘This information should be made much clearer on the card application website. The fact that Amex is listed as an accepted card but they can’t transfer from ‘a lot’ of accounts is shockingly misleading.’

Sainsbury’s Bank told Kat she should have called to confirm whether the balance transfer would be possible before applying for the card online, as its website also mentions ‘it does not offer balance transfers to all credit card providers’.

Sainsbury’s Bank has agreed to cancel Kat’s card and get in touch with credit reference agencies to ensure it doesn’t affect her being accepted for a new credit card.

The following providers have trouble accepting balance transfers from some American Express credit cards:

  • New Day: Any cards issued by New Day – including Aqua, Fluid and Marbles – will not accept transfers from Amex.
  • Sainsbury’s Bank: Customers have been asked to call 08085 40 50 60 before applying.
  • Virgin Money: Only accepts balance transfers from American Express cards underwritten by a UK Financial Organisation.

3. You might not be offered the best deal

Depending on your credit score, you may be offered a higher APR than advertised, a smaller credit limit, or a shorter 0% term.

According to a YouGov survey of 2,441 people in April 2022, commissioned by TotallyMoney, 40% of respondents said they feel lenders don’t make it clear that they may not receive the advertised interest rate.

In fact, regulatory requirements mean that lenders only have to give 51% of applicants the advertised rate.

This kind of information should be on your credit agreement, and in the card’s terms and conditions.

To avoid any nasty surprises, be sure to check the interest rate you’re offered, how to make repayments, and what fees and charges are in place.

4. Balance transfer fees are increasing

Some cards don’t charge a balance transfer fee, but others charge up to 5% for each balance transfer. If you want to move balances from multiple cards you want to clear, the costs can add up.

Balance transfer fees on some credit cards have increased by 2% in the past quarter, according to research by Defaqto.

The average fee for transferring a balance to a fee-charging card is currently 2.65%, compared to 2.42% last year.

With cards that don’t charge balance transfer fees, the 0% interest term tends to be shorter, so you won’t have as long to pay off the debt.

Here are the credit card deals with the longest 0% balance transfer terms that don’t charge balance transfer fees:

Card Balance Transfer Fee Length of 0% interest term APR
NatWest Balance Transfer Credit Card Mastercard 0% 19 months 23.9%
Royal Bank of Scotland Balance Transfer Credit Card Mastercard 0% 19 months 23.9%
Ulster Bank Balance Transfer Credit Card Mastercard 0% 19 months 23.9%
Sainsbury’s Bank 17 Month Low Balance Transfer Fee Credit Card 0% 17 months

5. 0% interest terms are getting shorter

Five years ago, the top 10 balance transfer credit cards had introductory interest-free terms of more than 40 months or more, according to TotallyMoney.

But now, the longest term you can get is 30 months. This term is offered by five providers: Barclaycard, NatWest, Royal Bank of Scotland, Sainsbury’s Bank and Ulster Bank.

These cards all charge balance transfer fees between 2.89-2.99%.

The change could be down to lenders tightening their affordability criteria due to the cost of living crisis.

Use our balance transfer calculator to work out what you can afford to pay each month and your ideal 0% period, which you can use to help you find the best card for you.

6. You should do an eligibility check before applying

Before you apply for a credit card, it’s a good idea to carry out an eligibility check.

Eligibility checkers are a quick way to gauge whether you’re likely to be accepted for a credit card without having to fill out a full application – and these checks won’t appear on your credit report.

You’ll have to enter a few details about yourself, and you should get an answer in a few minutes.

Many credit card providers have an eligibility checker on their website.

If you apply for a credit card, and then get rejected, it will be noted on your credit file and could impact your credit score.

7. Balance transfer credit cards for poor credit scores

While many of the best deals will only be offered to those with ‘good’ credit scores, you may still be able to get a balance transfer credit card if you have a poor credit score.

However, it’s likely the 0% interest term will be shorter, and the credit cards will usually have a higher APR. This means after your 0% interest term ends, you’ll be paying a lot of interest each month.

The top three balance transfer cards for those with poor credit are all offered by Virgin Money, according to data from Moneyfacts.

These cards offer rates not dependent on your credit score, and they all offer ‘credit repair’ – a feature that can help you improve your credit score, as long as you make the repayments on time.

If you can’t find a credit card with a term that’s long enough to pay off your debt, it might be worth considering a personal loan.

8. You might get cashback for signing up

Some credit card providers may reward you with cashback when you sign up – but this shouldn’t be the sole reason you take out the card, it’s an added perk if you were planning on getting it anyway.

At the time of writing, there are several balance transfer offers on TopCashback – from Barclaycard, Santander andTesco Bank.

If you want to take advantage of any of these, you just need to make sure you click through to credit card providers through the TopCashback link.

You can get up to £19 cashback with Barclaycard, £21 with Santander and £30 with Tesco Bank.

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