Balance Transfer Tips

If you are looking around for a new credit card account which has a 0% balance transfer offer, then make sure that you compare a number of offers before proceeding. That is because there may be different terms and conditions applying to balance transfers depending upon the credit card issuer.

First, check the size of the transfer handling fee. That is the percentage of the balance transferred that will be charged to your account as a fee for accepting the transfer. For example, if the handling fee was 2.5 per cent than a £1,000 transfer would cost £25. However, some card issuers may specify a minimum fee such as £75, so in cases such as that you would end up paying a 7.5 percentage handling fee.

On the account to which you are transferring the balance, check the maximum percentage of your credit limit that can be transferred. For example, if your card issuer specifies a maximum of 90% and your credit limit is £5,000, then the most you will be able to transfer in will be £4,500 and not your entire credit limit.

If you are applying for an affinity card, such as those offered by air miles, charities, professional bodies or even your favourite football club, then confirm that the issuer of the new card isn’t your existing credit card company. That is because credit card companies do not allow a 0% balance transfer between two accounts that are both held by them.

Remember to continue to make payments to your existing credit card issuer, after you transfer your balance, until such time as the balance is zero. If you have been paying interest on your credit card account before transferring the balance, you will have some residual interest to pay even if you have initially cleared the balance with the transfer. So, don’t cancel any direct debits to your old credit card provider until you receive a statement saying that you owe nothing.

Also, ensure that you write to them if you wish them to close your account, or the account will remain open and you will continue to have information sent to credit referencing agencies from that credit card company that could affect your credit rating.

Finally, if you find a 0% transfer balance, remember to make at least the minimum repayment each month or your promotional 0% interest rate may be removed, and your account will become subject to the standard purchase interest rate.

This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.

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