A balance transfer moves existing credit card debt to a new card, usually one offering a 0% introductory period, in exchange for a one-off transfer fee typically around 2% to 4% of the balance moved. On a £3,000 transfer, a 3% fee costs £90 upfront, which can undercut ongoing interest at a standard 24.9% APR.
TL;DR · LAST REVIEWED A balance transfer moves card debt to a 0% deal for a one-off fee, typically 2% to 4%. Worked example: £3,000 at 24.9% APR repaid over 12 months costs roughly £373.50 in interest; the same balance moved for a 3% (£90) fee saves about £283.50 if cleared within the 0% window.
KEY FACTS
- Balance transfer fees typically run around 2% to 4% of the amount moved, charged once
- A 0% deal usually covers only the transferred balance, not new spending on the same card
- Approval is a standard credit application: a hard search, and the limit granted may be below the balance
- Any balance left when the 0% period ends reverts to the card's standard purchase APR
- A missed minimum payment can end the promotional rate under the card's terms
What is a balance transfer and how does it work?
A balance transfer is the movement of an existing credit card debt from one provider to another, usually to access a promotional 0% interest period on the new card, and it requires the new provider to approve both the applicant and the amount being transferred as part of a standard credit application.
The process is not instant: after approval, the new provider pays off the old balance directly (up to the credit limit granted), and the debt then sits on the new card under its terms, while the old card typically remains open unless the account holder closes it separately.
Approval is not guaranteed and the credit limit granted may be lower than the balance a person wants to transfer, in which case only part of the debt can be moved, leaving the remainder on the original card at its existing rate. A balance transfer also triggers a hard search on the applicant's credit file, the same as any other credit application.
How much does a balance transfer cost?
Balance transfer fees typically run around 2% to 4% of the amount transferred, charged as a one-off cost added to the transferred balance rather than as ongoing interest, on top of which the standard purchase APR applies once the promotional 0% period ends.
Some cards periodically offer reduced-fee or no-fee transfer promotions, though this is not standard across the market and availability changes over time.
A 0% balance transfer deal usually applies only to the transferred balance, not to new spending made on the same card, which is commonly charged interest from the date of the purchase at the card's standard rate. The card's summary box sets out the exact treatment of new purchases during the promotional period.
How do you calculate balance transfer savings?
On a £3,000 balance kept on a standard card at 24.9% APR and repaid evenly over 12 months, the interest cost is approximately £373.50; moved instead to a 0% balance transfer card with a 3% fee, the one-off cost is £90, a saving of roughly £283.50 over the same period, provided the balance is cleared within the 0% window.
The calculation: at 24.9% APR with the balance reducing evenly to zero over 12 months, the average outstanding balance across the year is roughly £1,500 (half of £3,000), so the interest cost is approximately £1,500 multiplied by 24.9%, which comes to about £373.50. This is a simplified illustration; UK card issuers calculate interest daily on the actual outstanding balance, so the real figure will vary slightly depending on the exact repayment schedule and payment dates.
Against that, a balance transfer to a 0% card with a 3% fee costs a flat £90 upfront (£3,000 multiplied by 3%) and no further interest for the length of the promotional period, as long as the balance is cleared before that period ends and no additional interest-bearing spending is added to the card. The saving in this example, roughly £283.50, assumes the full balance is repaid within the 0% window; if it is not, any remaining balance reverts to the card's standard purchase APR, which would need to be added back into the comparison.
What are the risks of balance transfers?
The main risks are losing the 0% rate through a missed minimum payment (which can trigger the card's standard APR under the issuer's terms), the promotional period ending before the balance is cleared, new spending on the same card being charged interest separately from the transferred balance, and the transfer fee itself reducing the headline saving.
A balance transfer also does not reduce the total amount owed; it moves the debt and can reduce the interest cost of carrying it, but the underlying balance still needs to be repaid.
A further consideration is that repeated balance transfers between cards can affect a credit file through the accumulation of hard searches and new account openings, and providers may decline an application from someone who has opened several new credit accounts in a short period, regardless of their income or existing balances.
RELATED GUIDES
DISCLAIMER
This guide is for general information only and is not financial advice. Credit products are regulated by the Financial Conduct Authority. Rates, fees and criteria change and vary by provider; check current terms directly with any provider and the FCA Financial Services Register before applying.
Frequently asked questions
Does a balance transfer affect a credit score?
Applying for a balance transfer triggers a hard search and, if approved, a new account on the credit file, both of which can have a small temporary effect on a credit score. Over time, successfully managing the transferred balance and reducing overall utilisation can support the score.
What happens if the 0% balance transfer period ends before the debt is cleared?
Any remaining balance reverts to the card's standard purchase APR from that point onward. It is worth checking the exact end date of the promotional period in the card's terms and setting a repayment plan aimed at clearing the balance before that date.
Can new purchases be added to a balance transfer card?
This depends on the specific card. New spending is commonly charged interest separately from the transferred balance, often from the date of purchase, so using the same card for everyday spending during the 0% period can undermine the point of the transfer. The card's summary box sets out the exact treatment.
Is a balance transfer the same as a debt consolidation loan?
No. A balance transfer moves an existing card balance to another card, usually to access a temporary 0% period. A debt consolidation loan is a separate credit product, typically a personal loan, used to pay off multiple existing debts and replace them with a single fixed monthly repayment at a set interest rate.
Is a balance transfer worth the fee?
This depends on the size of the balance, the APR being avoided, the fee charged, and whether the balance can realistically be cleared within the 0% period. Working through the arithmetic for a specific balance and rate, as shown above, is a more reliable method than assuming a transfer is automatically cheaper.
SOURCES
- Financial Conduct Authority, Consumer Credit sourcebook (CONC) – accessed 19 July 2026
- Financial Services Register – accessed 19 July 2026
- Consumer Credit Act 1974 – accessed 19 July 2026
- UK Finance, card lending data – accessed 19 July 2026
