Banking expert issues warning over popular balance transfer credit cards
Borrowers may only have a set timeframe to transfer the balance over to get the 0% deal
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.January often arrives with a sting, bringing a fresh wave of bills and financial pressures.
For those feeling the pinch, the allure of a shiny new credit card offering 0% interest on balance transfers can seem like a lifeline. But is this financial quick fix all it’s cracked up to be? While balance transfers can offer a cheaper way to manage debt, navigating the fine print is crucial to avoid unexpected costs.
If you need to go into debt, making use of no or low-interest offers could be a cost-effective way to borrow.
However, there are some things to be aware of if you’re planning to make a balance transfer to a new card, to make sure you’re not caught out by costs that you weren’t planning for.
Katie Brain, a banking expert at Defaqto, which maintains a financial product database, says: “Many balance transfer cards will charge a fee to move your debt over to them.
“This fee is a percentage of the amount you will put on the card.”
According to Defaqto’s analysis, in early January 2025, the average percentage fee to move money over to a balance transfer card with a 0% interest offer was 2.79%.
Brain adds: “There’s a good choice of balance transfer cards out there that offer you a 0% interest period, meaning you pay no interest on your debt for a specified time period.”
When weighing up different cards, Brain says that longer 0% interest periods can mean higher balance transfer fees – so it’s worth considering how long you need the zero-interest period to last for and being realistic about how quickly you could pay the balance off.
Brain also cautions that missing a repayment on a balance transfer card could mean the interest-free offer is lost – “so don’t overstretch yourself”.
Another thing to bear in mind is that borrowers may only have a set timeframe to transfer the balance over to get the promotional 0% deal.
Brain also says it’s crucial to make a note in your phone calendar with an alert a month before the 0% interest offer ends.
That way, you can assess your finances and where you are at before interest starts to kick in.
Also, remember that not everyone will get the 0% offer advertised.
Brain says: “Many balance transfer cards will advertise specific offers, but these will depend on your credit file.
“So check which cards you would be eligible for first.”
She highlights online resources such as MoneySavingExpert Credit Club, ClearScore and Credit Karma.
Online tools can be used to give an initial indication of whether you might be eligible for a particular card – before going ahead and making a full application.
These “soft” credit searches do not leave a footprint behind on your credit records, unlike “hard” credit searches, when a full application is made.
Finally, if you’re planning to make new purchases, Brain suggests always checking what the interest rate is for doing so – as you may not want to spend on a balance transfer card.
If you do want to make new purchases on credit, you could try looking for a card which offers a balance transfer and purchase offer, she adds.