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When you move an existing credit card or store card balance, to a single credit card with a different provider, that’s a balance transfer.
For a quick run through, watch our short video.
Helping you understand Balance Transfers.
Hannah's built up some borrowing on more than one credit card and store card. And she's keen to pay it all off as soon as she can.
A balance transfer might help her. It could move the balances from Hannah's existing cards to another card – maybe one with a different provider.
This could give Hannah just the one monthly payment to manage. And if she's paying quite high interest on her existing cards, moving her balance to a card with a lower interest rate could reduce Hannah's borrowing costs. It could also help give her a bit more time to pay things off.
With a balance transfer, the minimum you can move over is usually £100. While the most you can transfer is usually 93% of your credit limit… leaving some room for any potential interest or fees.
There are two main costs of a balance transfer.
Your transfer fee, which is a percentage of the amount you're moving, added on to your balance when you make the transfer.
And interest, based on your balance transfer interest rate, which you'll pay over time until your balance is cleared.
Sometimes, you'll find a credit card with an interest rate as low as 0% for a set period of time as part of an introductory or promotional offer. But once the offer runs out, any remaining balance will be charged at your standard balance transfer interest rate until repaid. At Halifax, we'll always tell you your balance transfer fee, and interest rate, up front.
Now, let's see how a balance transfer with an introductory or promotional offer could work for Hannah.
She's decided to get herself a new credit card, with a 0% balance transfer interest rate for 12 months, on all transactions made in the first 90 days, and a 3% balance transfer fee.
Hannah's balances on her two existing cards is £2,000, and both cards have an annual interest rate of 20% per annum.
If Hannah keeps her balances on her old cards, paying £200 every month, it will take her 11 months to clear them and she'll pay £187 in interest.
But… if she moves her balances to her new card with the 0% introductory balance transfer interest rate, paying her 3% transfer fee, she could clear her balances faster.
By paying £206 per month, it'll only take Hannah 10 months to clear her balance and she'll pay the £60 transfer fee with no interest charges at all.
So that's a total saving for Hannah of about £127 using her 0% interest rate offer on balance transfers.
We should add, we've made a few assumptions here.
Firstly, that Hannah never breaks her card's terms and conditions.
That she's made no other transactions on her new card during this time.
And, that she clears her full balance before her 0% interest rate offer ends.
Right, let's just quickly go over a few key things…
A balance transfer could help you: manage all your borrowing in one place, reduce borrowing costs with a lower interest rate, and give you more time repay what you owe.
But always think about your options first, and make sure it's the right choice for you.
We hope this info helps. Thanks for watching!
Once approved, balance transfers should be complete by the next working day.
The minimum transfer amount at Halifax is £100. The maximum is up to 93% of your credit limit.
Keep in mind that fees might apply to each transfer.
To request a balance transfer with Halifax, you’ll need:
Before you transfer, it’s worth checking we’ve got the right contact details for you.
At Halifax, you can transfer balances from most credit and store cards displaying the Mastercard®, American Express® or Visa® logo, but not from loan companies, bank accounts or other Halifax credit cards.
Transferring a balance, in itself, won’t damage your credit score.
However, if you’ve taken out a new credit card with the intention of transferring balances, that in itself could affect your credit score, as you’ve increased the level of credit available to you.
New credit applications can damage your credit score in the short term too.
It’s a good idea, once you’ve transferred your balances, to close any accounts you don’t need anymore. That could help your credit score to recover.
With a balance transfer, move existing credit or store card balances to single credit card.
Halifax is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.