Balance transfer?

What’s a balance transfer?

A balance transfer allows a person to move the debt built up on one credit card to another.

The process is particularly useful if you are transferring the debt onto a card with a lower interest rate or even one with an interest-free period, as such a move will mean you are able to pay it off quicker. A balance transfer is also an ideal way to consolidate a range of monthly payments and ultimately improve how you manage your finances.

It is worth bearing in mind that banks will often charge some level of fee on balance transfers. Furthermore, some cards may only offer a favourable rate for a certain period of time before it then increases to a significantly higher level.

3 benefits of a balance transfer

  1. Transferring your credit card balance to another card with a lower interest rate may mean you’ll pay less interest on the debt. This means more of your repayments will go to paying off the debt, which in turn means you can pay it off faster.
  2. By transferring the balances of several cards onto a single card, you can consolidate the debt into a single, straightforward monthly payment.
  3. A balance transfer can simply be a great way to get a better handle on your finances. If you are able to switch credit card debt onto a card with a 0% interest free period for a small fee, you should be able to take strong steps towards clearing the balance sooner.