What is a balance transfer?
Understanding balance transfers
What is a balance transfer?
A balance transfer lets you transfer the balance from one credit card or store card, where you may be paying interest, to another credit card..
This can be a good way to keep track of your balance and payments with everything in one place. Plus, if you’ve recently compared credit cards and discovered one that charges you less interest, transferring debt from one credit card to the other could save you money.
By reducing the overall cost of what you owe, a credit card balance transfer could help you pay off your outstanding balance sooner, and even reduce your outgoings. Transferring high interest balances to a credit card which features a promotional offer or lower rate could save you money on interest repayments.
Balance transfers - a quick summary
Before you get into the more detailed information below, you might like to watch this short video about balance transfers. It covers the basic benefits and the different ways you can request a transfer.
How do balance transfers work?
By transferring high interest balances to a credit card which features a promotional offer or lower rate, you could save on interest repayments, although remember that transfer fees might apply to any transfers you make.
Credit card providers typically promote interest-free periods on their card offers, which could help you save even more and pay off your balance faster – as long as you can pay it off during the initial interest-free period.
How to do a balance transfer
At MBNA you can ask for a balance transfer from any card from another lender that displays a Visa, Mastercard or American Express® logo. You can do this as part of your credit card application, and afterwards using the MBNA Card Services App and Online Card Services (where you’ll be able to see all available offers), or by contacting us.
Remember: you’re still responsible for the balance, it’s just owed to a new and different provider. You may also be paying a different rate and there is usually a fee to transfer a balance. You’ll need to make at least the minimum payment each month, but you won’t usually be charged extra if you’d like to pay more each month to clear your balance faster.
How long does a balance transfer take?
After we approve your request, the transfer will normally arrive by the next working day. Working days do not include weekends or bank holidays.
Please continue to make payments to any other credit or store cards you have until the transfer shows on your statements.
Balance transfer fees
You may be charged a transfer fee for any transfers you make, which will normally be a percentage of the balance you’re transferring. As an example, if you want to transfer £1,000 and the balance transfer fee is 3%, it would cost you £30 to make the switch.
Remember, it’s always better to pay more than your minimum payment each month in order to pay off any debts in the promotional rate period. If you make only the minimum payment each month, it will take you longer and cost you more to clear your balance.
Important to know
Balance transfer requests are subject to eligibility and security checks, but these will not leave a footprint on your credit file.
Balance transfers must be a minimum of £100, and the maximum amount you’ll be able to transfer is up to 93% of your credit limit. This is to allow for any balance transfer fee and any other fees, as well as charges or transactions which haven’t yet reached your account.
You cannot transfer balances between MBNA accounts.
Once the balance transfer has been processed you cannot cancel it and any fees cannot be returned.
If you’ve taken advantage of a promotional offer, but you haven’t paid off the transfer amount in full before that offer ends, interest will be payable on the remaining amount at the standard interest rate applicable at that time.
Other useful information
Keeping promotional rates - to stay eligible for any promotional rates that go with your balance transfer, you must always stay within your credit limit, and make your payments on time each month.
Payment allocation - any payments you make will be used to pay off amounts on which we charge the highest rate of interest first, then the next highest rate, and so on down to the lowest rate of interest. Please check your terms and conditions for more info on how we apply your payments.
Other borrowing options - before asking for a balance transfer it's worth considering other ways to borrow, as well as any savings you may have, as these could be better options for you.
0% interest cards explained
When you’re looking for a credit card with a lower interest rate, you may find some cards offer a promotional rate of 0% interest for a specific period of time.
Promotional 0% interest durations on balance transfer credit cards vary greatly, but can last for some months, giving you more time to clear your balance.
It’s always a good to have an idea of your credit rating before you apply. Follow these tips to make sure your credit score is as healthy as it can be:
- 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.
For more information on improving your credit score, take a look at our guide.
A balance transfer can be a great way to help you stay on top of your repayments, but before applying think carefully about what you can afford to pay back.