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 handling 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
When applying for a new balance transfer credit card online, most providers will ask if you would like to make a balance transfer as part of your application. Simply fill in the details for any cards you’d like to transfer the balance from and subject to acceptance, the lender will pay off your old balance and transfer it to the new credit card.
If you already have a credit card, your provider might allow you to transfer a balance to your card, subject to acceptance and your credit limit. At MBNA you can request a balance transfer online, through our app, or by giving us a call.
Remember: you’re still responsible for the balance, but it’s now 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?
For existing customers, approved transfers will reach your credit card account the next business day, unless you make your request after 6pm, or on a weekend/bank holiday, when it will take an extra business day. That’s as long as your request passes our normal security checks, and there aren’t delays with your existing credit provider.
Balance transfer fees
You may be charged a handling 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 remember
All transfers are subject to our approval.
The lowest amount you can transfer is £100. The maximum amount you can transfer depends on your credit limit and any existing balance you may have on your account. The total transfer amount plus any balances already on your account and any transfer requests already made, cannot be more than 93% of your credit limit. This is to allow for future transactions on the account.
You cannot transfer balances between MBNA accounts.
Once the transfer has been processed you cannot cancel it and any fees cannot be returned.
Other lenders may charge a fee for settling a loan early.
Promotional offers: 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.
Remember to stay within your limit and to make your monthly payments on time, otherwise you’d lose the promotional offers on your MBNA account and pay the standard interest rate instead.
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.
Whether or not you’re offered the full 0% interest duration promoted is likely to depend on your personal circumstances and credit history. If you’re an existing customer and request a balance transfer, it’s treated the same as applying for a new card and will be subject to approval.
That’s why it’s 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 and install a landline (if you haven’t already)
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.