A balance transfer can be explained simply as a balance transfer! When a balance is transferred usually from a credit card, but possible from a bank account or loan to a credit card with a offer interest rate (usually 0%) for a set period. It does not have to be entire amount. The card receiving balance will an interest rate for a set term, normally 6 months, but can be 9 months or even a year. Take a look at current balance transfer deals currently available. This will give you a flavour of typical kind of deal available.

Should I apply for a balance transfer ?

It is important to remember that a balance transfer does not mean that debt has gone away. It just means you are not paying interest on it. You will still have to maintain payments.

This may seem obvious but many people do not get this straight in their mind.

The basic criteria for getting a balance transfer is when you regularly have an outstanding balance after making your monthly payments. This is amount you should look to transfer to another card. This will mean that for period of offer you will pay no interest on balance (provided you make minimum payments).

You should be very wary of taking up a balance transfer, if your overall debt is increasing. A balance transfer is not a green light to spend more money. The money you save should be used to decrease your debt.

What should I look for in a balance transfer ?

You need to be aware of following when looking for a balance transfer card

Good things

• Length of offer period.
• Offer Interest Rate.
• The zero or low interest rate charged on balance.
• Possible transfers from loans and overdrafts.
• On some cards you can transfer from existing loans and overdrafts and still get offer.

credit cards in UK

A balance transfer credit card is basically an offer of either a zero interest rate or very low interest rate for a set period. The typical period is 6 months although there are variations on this and there have even been some low rates set for lifetime of balance. However, these are becoming rare. Once, offer period expires then outstanding balance reverts to standard rate on purchases. This is very important, as at this point credit card company will hope consumer will not take any action and so company can begin to earn money on balance.