What You Need To Know Before Getting a Balance Transfer Card

Managing your credit card debts is made a whole lot easier by using Balance Transfer cards. When you take out a 0% balance transfer card you will be able to make considerable savings.

The Basics of Credit Cards

For someone new to credit cards they may seem daunting and confusing but credit cards are one of the simplest and fastest forms of borrowing. Once you understand the basics, credits cards are easy to use.


Interest is what the lenders will charge for lending you money. Credits cards will show show interest in the form of APR (annual percentage rate) which will show you how much interest will be charge over the course of a year.

To give you an example if you where to borrow £200 at 20% APR it would cost you £40 of interest so you pay back £240 in total. This is a very basic explanation. You can work out how much your credit card will cost you per month in interest by diving the APR by 12.

If your credit card had a balance of £200 with a 20% APR you would be charged 3.34% (£3.34) each month or £1.67 for every £100.

Compound interest means you pay interest on the interested charges added to your balance. If you often don’t pay the balance of on your card in full, interest will be added for which you will be charged and interest added again.

Some cards will offer 0% interest for up to 18 months. This means you wont pay any interested on the items purchased during this period but remember to read the small print. Most card will only give you 0% on purchases in the first 3 months. Anything spent on the card after this time will be have interest at the full rate.

Credit Card Balance

The balance on your credit card simply means the amount of money you own to the lender. If your credit card balance was £1000 it means you have a debt or you owe £1000 to the lender.

Credit cards will never be in a positive balance. They will also be at Zero or negative as you either don’t own any money or you do.


Repaying your credit card is flexible. You can choose how much or how little you want to repay each month, but the lender will set a minimum repayment amount which will vary on how much you have borrowed, represented in a % of the total value you owe. If you miss the minimum repayment you will likely incur charges which can sometimes be quite high. This will also impact your credit report.

If you only make the minimum repayment then it will take you longer to clear the debt as interest will be added each month. Effectively you will be paying a lot more for the amount you borrowed.

Balance Transfer Cards

balance transfer card is essentially another credit card tho its designed to offer long 0% interest rates. Most credit card company’s will allow you to transfer a balance to them but not every credit card provider offers these cards

How Does a Balance Transfer Card Work?

You will need to apply for a balance transfer card. Always use eligibility checkers before you apply and check your credit score.

Once approved and you have your card you can begin to transfer balances. This can be done over the phone, at your bank and even online.

One common misconception if that move the debt from one card to another. This is not the case, in fact you actually move credit. Effectively you are using the balance transfer card to pay of your old credit card which puts it at 0, while your balance transfer card will go into a negative balance.You will then repay the debt on the balance transfer card.

0% Interest Period

Getting a card with a 0% interest period will mean you wont pay any interest on your credit card for a certain period of time. Once this time passes the interest rate will change to what it was when you signed up for the card. Typically these are high interest rates so you may want to look at closing the card once this happens.

These 0% interest period are expressed in a monthly basis, for example 6,12,18 months. This means you wont pay any interest on your credit card for that specific length of time.


Balance transfer cards are a great way to manage your debt however you must address the fundamentals that required you to need one. This means when you get a balance transfer card you should never spend on it and only use it as a way to help you clear an outstanding debt by ensuring your don’t pay interest as long as you pay off the balance before the interest free period ends.