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 Money
Page > Credit
Cards > Balance Transfer Credit Card - UK Guide
 In a
nutshell
Taking out a new credit card that will
accept the transfer of your existing credit card balance(s) on
to it.
Best
Credit Card For
People looking for better deals or
rates or those trying to control their credit card
spending.
Credit
Amount
The amount you will be given as a credit
limit for any credit card will depend on your salary and your
credit rating - and the internal specifications of your card
company and the card you want. The better your credit rating
is, the higher your limit may be. Conversely, with a bad
credit rating, you can't expect too high a limit initially
(although this may rise with time). If you want premium cards
then you must have a salary in excess of a certain level (i.e.
£20,000+). You'll automatically get higher credit amounts here
- in some cases, you get unlimited credit.
Advantages
If you
apply for a new balance transfer card the chances are you'll
be doing it to improve your APR - so, you'll immediately
benefit from lower interest rates which can save you
significant sums. You can even now find balance transfers that
operate at 0% - so you can put your existing credit card debt
(and sometimes other loans) on to your new card and you won't
be charged interest at all for as long as your deal lasts.
This can be a great way to get your card borrowings under
control. Some balance transfer cards also offer 0% or low
interest deals on new spending as part of the deal - so you'll
benefit in your introductory period from this as well.
What to
look out for
Your balance transfer offer may look
good for the period of your deal but you also need to look at
how high your APR will be once the deal is done. You may find
that it is much higher than low rate credit cards which would
cost you more in the long run.
Balance transfers at
0%/low interest are often used by people with big credit card
debts - they view them as a 'breathing space'. No or little
interest is added, so you can simply work to pay off the
capital you owe and will potentially make much more headway.
But, this only works if you do work to pay off your debts and
certainly won't work if you get carried away by the savings
you make in interest and spend even more. If you have credit
history problems then you may not be accepted for many balance
transfer deals - especially those that offer 0% for long
periods. Balance transfer cards have the same rules as any
credit card - if you don't make at least the minimum payment
every month then you'll be charged a penalty fee. If this
happens regularly then your missed payments will start to
appear on your credit rating which could cause you problems
further on down the line. And, as with any loan, if you can't
pay anything back at all, your card company can take legal
action to use your property/possessions to recover their
money.
Alternatives
This is
generally your best choice for cutting interest/APR.
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