Balance transfers: moving, not vanishing
Lesson 9 of 12 in our free Credit Cards: Tool, Not Trap guide: a 5-minute money game with the key points below.
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Questions you'll answer
Mo transfers £2,400 with a 3% transfer fee (an illustration: fees vary). How much is the fee?
Illustration: staying at 25% APR and paying £200 a month, Mo pays about £336 interest in a year and still owes about £336. With the transfer he pays the £72 fee and clears it in 12 months. Roughly how much does the transfer save?
When might a balance transfer NOT help?
Quick facts
- A direct debit that clears it before the 0% ends → Smart. Balance ÷ months left, automated.
- Spending on the old card again now that it's 'empty' → Trap. Now there are two debts. The classic trap.
- Shopping on the new card without checking its purchase rate → Trap. New spending on a transfer card may be charged at a different, higher rate.
- Checking the transfer fee and end date before applying → Smart. Know the cost and the deadline first.
- Missing a payment during the offer → Trap. It can end the 0% early and dent your file.
- Locking or cutting up the old card → Smart. Removes the temptation to rebuild the debt.