Consolidating debt with a credit card

If your application for a 0% balance transfer credit card is accepted, you can move other credit and store card debt onto the new card so that you’re no longer paying interest. You’ll usually need to do this within 60 to 90 days to avoid losing the interest-free deal.

 The 0% rate lasts anywhere between 6 and 32 months. And there is usually a fee, generally around 2-3% of the amount transferred.

If you transfer debt from other cards charging high interest and pay off everything you owe before the 0% rate ends, you could save yourself serious money.

It may seem like a no-brainer, but there are risks when using a 0% balance transfer credit card to consolidate your debts.

The rate will soar once the 0% deal ends

Make sure you pay off your balance in full or shift to another card before the 0% rate ends, or your costs may soar. Typically, rates will jump to between 18% and 40%.

Work out if you can afford to clear the full balance before the 0% rate ends using our budget planner.

You could lose the 0% deal if you miss a payment

If you don’t make at least the minimum monthly payment, you may lose the 0% rate. You should generally aim to make more than the minimum payment. Otherwise, you won’t clear the balance before the 0% rate ends.

 If you only ever make minimum payments, you’ll end up shelling out more on interest, fees and charges than reducing what you owe. And if this lasts for 18 months or longer, you’ll be classed as being in persistent debt.

Spending will be pricey

It’s generally not a good idea to make additional purchases or withdraw cash with a balance transfer card. Although balance transfers are interest-free, these other activities are not and could cost a significant amount.

The 0% rate on balance transfers is time-limited

With most cards, the 0% balance transfer period is limited to 60 or 90 days. After this point, any transfers will be charged interest at the card’s normal rate, unless they’re paid off in full.

You might also pay a higher fee on later transfers.

Balance transfers aren’t usually available for cards from the same bank

You’re unlikely to be able to transfer a balance between two cards from the same bank or even the same banking group.

There’s no guarantee you’ll be eligible

You might not be eligible for a 0% balance transfer credit card if you have a poor credit score.

No, but it’s possible you could get a money transfer credit card to do this. These cards let you move money into your bank account. This money can then be used to pay off a loan.

As with balance transfer cards, you may be able to get a 0% introductory rate, meaning you won’t pay interest until the deal comes to an end.

Money transfer credit cards typically allow you to move around 90% to 95% of your credit limit to your bank account. You’ll usually need to pay a fee of up to 5% on the money you transfer.

If you’re considering a 0% balance or money transfer because you’re struggling to keep up with your existing debt repayments, get in touch with us before signing on the dotted line for a credit card.

We’ll check if there are any options that will make it easier for you to manage your debt without borrowing more.