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Sainsbury's Bank

What is a balance transfer?

A balance transfer is where part or all of a debt you owe is transferred from one credit card to another, usually to a card with a lower interest rate.

Why use a balance transfer?

You might consider a balance transfer in order to:

Save money

Some credit card providers charge more interest than others. If you qualify for a lower interest rate than your current card issuer charges, transferring your balance could help you to save money over time. If your new credit card has an introductory rate, once this expires the credit card company will begin charging you the standard rate you qualified for. Provided your interest rate is lower after transferring your balance, and it’s worth paying the transfer fee, you could save money on your purchases by paying less interest.

Organise your finances

A balance transfer can help to have your debt all in one place leaving you with only one monthly payment to make, which could help you budget.

Limits and fees for balance transfers

The amount you can transfer depends on how much of your agreed credit limit is available. It is important to note that there is also a fee for balance transfers and this should be made clear in the information about each card. Transfer fee amounts are often a percentage of the total balance transferred. For example, if you choose to transfer £100 and the charge is 3%, you will be charged £3.

At the end of any promotional period the interest rate will usually jump to the standard rate for balance transfers, so if you haven’t paid off the transferred balance in full by then you will start paying interest on the outstanding balance. Your repayments may not go towards paying off the balances transferred if you have made other types of transactions on the account.

As with any financial decision, do some research and make sure a balance transfer is the right move for your circumstances. Our guide to how credit cards work could be helpful should you require more information.