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Understanding balance transfers

What is a balance transfer?

A balance transfer is where part or all of a debit balance (or debt) you owe to another lender is transferred from one credit card to another, usually to save money on interest rates.

A balance transfer credit card can be good way to slow down and take stock of your debt. By switching the debt to a credit card where you pay less interest on your borrowing, you can:

  • Pay off existing debt at a lower rate of interest.
  • Organise your finances – if all your debt is in one place you’ll only have one monthly payment to think about.


Example of a balance transfer*

  • Mrs. Smith has a balance of £1,000 outstanding on a store card that charges interest at 26% APR on which she’s making monthly payments of £20.
  • Mrs. Smith takes out an MBNA credit card offering 0% on balance transfers for 12 months, with a 3% handling fee.
  • She transfers her store card balance to her new MBNA card and continues to make monthly payments of £20.
  • After 12 months, Mrs. Smith has made a saving of £216.22 even taking into account the 3% fee she was charged for the transfer.

Most credit card issuers charge a handling fee to do a balance transfer. However, if there is a promotional interest rate of, say, 0%, it may still save you money even with the fee.

At the end of any promotional period the interest rate will usually jump to the standard rate for balance transfers, so if you haven’t paid off the transferred balance in full by then you will start paying interest on the outstanding balance.

Your repayments may not go towards paying off the balances transferred if you have made other types of transactions on the account.


Existing customer? How to balance transfer

Existing credit card customers can request a balance transfer by phone or on Online Card Services by selecting ‘Make a Transfer’.

You can transfer balances from a number of credit or store cards up to an agreed credit limit. It’s very straightforward—we just need details of the account you are transferring the balance from.


Limits and fees for balance transfers

The amount you can transfer depends on how much of your agreed credit limit is available—this is individual to you. It is important to note that there is also a fee for balance transfers—usually around 3%. Please refer to the terms and conditions for each card. For example, if you choose to transfer £100 and the charge is 3%, you will be charged £3. This amount will appear on your statement and in Online Card Services.

* This is not real account information and is used as an example only.