Should You Get A Balance Transfer Credit Card? Here Are The Pros And Cons…

balance transfer credit cards

Are you frustrated by the cripplingly high APR rates on your credit cards?

Or maybe you find the sheer number of bills you pay at the end of each month daunting or confusing. A balance transfer credit card may be a great solution for you. Interested? Here’s what you need to know to help you decide if a balance transfer credit card is for you…

What actually is a balance transfer credit card?

Essentially, it does what it says on the tin – it transfers the balance of one credit card onto another credit card (the balance transfer card). 

In practice, the new credit card company is buying your debt from another credit card company. 

This sideways step may not seem like your route to greater financial security, but it many ways, it could be! 

Why should you consider getting a balance transfer credit card? 

There are two main reasons to use a balance transfer credit card:

  • Moving your balance from multiple credit or store cards onto one credit card consolidates your debt in one place. This makes your payments far easier to track and stops you paying different bills, to different credit card companies, at different times of the month. Instead, you pay one credit card bill each month. Ahh…. nothing like simplicity. You’ll have a far clearer view of your finances and what you can and can’t spend. 
  • Almost all providers of balance transfer credit cards will offer introductory promotions. These usually come in the form of  0% APR for a set number of months (generally 12-24 months). This is especially valuable if you currently use a high-interest rate credit card and are struggling to keep on top of interest payments. A balance transfer credit card with a 0% APR allows you to focus your repayments on your outstanding principal amount, rather than just the pesky interest. Who doesn’t love saving money?

Are there any disadvantages to getting a balance transfer credit card?

This all sounds great, but surely there’s a catch? Well yes, and no. The banks have to make money somehow don’t they? 

The main thing to watch out for are transfer fees.

The credit card company will usually charge a fee for transferring your balance from your previous provider to them. This is generally around 3% of the balance transferred, but it varies.

To give an example (who doesn’t love an example?): If you transfer a debt of £,3000 with a fee of 3%, you will pay a £90 upfront fee. 

Some will charge lower fees, but in these instances, the 0% APR period will usually be shorter, so watch out. Conversely, a higher transfer fee will normally incur a longer 0% APR period.

For example, a company with a 1% transfer fee is likely to have a short 0% APR period than a company with a 5% transfer fee. 

It’s important to factor in the transfer fee when calculating the potential savings of a balance transfer credit card. That said, you shouldn’t let the fee put you off too much and there are many great sites to help you with the maths. We’d always recommend using a balance transfer calculator to ensure that you’re making the right financial decision for you. 

The second thing to watch out for is ensuring that you clear your debt before the end of the 0% APR period. If you don’t, the credit card company will start to charge interest. If you’re not careful, you may end up paying just as much interest as before. 

Lastly, as always, look out for your credit rating! Most credit card companies will refuse you if your rating is poor. 

There are several ways to improve your credit rating but here are 3 easy tips:

  • Don’t apply for multiple credit cards in a short space of time
  • Stay on top of other borrowing and don’t miss or make late payments
  • Register on the electoral roll

What are some of the most popular balance transfer credit cards?

Like  everything else, you need to consider which card (if any!) is right for you. But here are 5 of the most popular…

  • MBNA Low Fee 0% Balance Transfer Card:
    • 0% APR for 26 months. (19.9% thereafter) 
    • 1% Balance Transfer fee
  • Halifax Balance Transfer Card:
    • 0% APR for 20 months (19.9% thereafter)
    • No balance transfer fee!
  • Virgin Money Balance Transfer Card: 
    • 0% APR for 27 months
    • 1.45% balance transfer fee
  • Barclaycard Platinum With Balance Transfer: 
    • 0% APR for 28 months
    • 1.75% balance transfer fee
  • Lloyds Platinum Balance Transfer Card: 
    • 0% APR for 24 months 
    • 1.5% balance transfer fee

Think you need one in your wallet?

Convinced? If not, well done for getting to the end of this article – you’ve done well to get through something in which you have zero interest (get it?) 

If you are, or perhaps you already have a balance transfer credit card, make sure you register with Curve and forget the wallet! 

If you join Curve, get ready to streamline your wallet and say goodbye to fumbling around the bottom of your bag for the right card. With Curve, you simply open the app, select the card you’d like to pay with, and tap your Curve card. 

That’s not all. With Curve, you get a load of other awesome features, such as the power to Go Back In Time, just like the Avengers (well, sort of). Accidentally put the dog food on expenses? No problem! Open the Curve app, and provided the payment was within 14 days and under £1,000* (who buys that much dog food anyway?) you can switch the card from which the payment was made.