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Three 0% Balance Transfers myths busted

Confused by 0% balance transfer cards? New research shows you’re not alone. We’ve taken on common misconceptions to make sure you know how they work and whether they’re right for you.

The idea behind 0% Balance Transfer credit cards is to help you avoid high interest rates on an existing credit card.  To take advantage you apply for a new credit card with a different company and, if accepted, transfer the balance across. Then for a limited period, you pay 0% interest on the balance.

So what are the ways people misunderstand these cards? Here are three myths about Balance Transfer cards and how they really work.

MYTH 1: 0% Balance Transfer cards are free

Moving your debt from one credit card to another for nothing might seem too good to be true – and that’s because it is.

Consumer group Which? has found seven in ten people believe 0% Balance Transfer credit cards are free. They’re not.

In most cases you have to pay a fee to complete the transfer. This is normally a percentage of the balance you want to move. So transferring £1000 to a 0% Balance Transfer card with a fee of 3% would cost £30. Which? estimates fees add up to £334 each year.

However if you are paying a large amount in interest or penalties on a credit card balance, the transfer fee could be a cheaper option while you get your finances in shape.

MYTH 2: You don’t have to pay back money for the length of the deal

As with any credit card you need to make a minimum payment each month. Fail to do this and you’ll be hit with penalties.

Though a minimum payment will suffice, paying the maximum you can afford instead will clear the debt quicker. Remember, when the deal ends you will start paying interest on the balance, unless you transfer it again.

MYTH 3: You never really need to pay off a credit card debt as you can always move your balance to another card

Some people think they can keep moving their balance from card to card. In theory that’s possible, but as with any credit card application there’s a good chance you might be rejected or offered a different deal instead.

If you don’t get the new balance transfer card you applied for, this will show on your credit report and could affect the likelihood of getting another elsewhere.

What do you think?

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  • Chris / 6 April 2018

    Myths 1 & 3 have been 100% true for me over the past 12 years. I have never paid a penny in interest or transfer fees and instead have made a substantial sum investing the banks money in zero risk bank accounts and the like - if you understand how the system works, look after your credit rating (use the Clearscore App) and can control yourself you will be fine. Very poor article in my opinion which is probably based on research asking the same people that fall for money scams all the time despite extensive reporting in the media.

  • Pauline Jeffrey / 19 October 2015

    Good explanation of transfer deals

  • Matthew Albery / 19 October 2015

    An excellent article. I did not understand how people were confused by these deals, but this articles has confirmed what I know in a very clear way. Thank you.

  • lubna / 18 October 2015

    U r v nice

  • eltee / 18 October 2015

    Balance transfer on credit card debt CAN work well if you've accounted for the fees and you're using the balance transfer as part of a planned debt reduction strategy. If you have enough money to earn interest in an account (3 to 5 % is possible with an ordinary bank account) it CAN make sense to make a minimum payment on the balance transfer debt as long as you SAVE what you can afford in an interest earning account. Ideally you'll have budgeted to save enough to clear the debt once the balance transfer deal has elapsed - but you HAVE to be disciplined about managing your money!

  • Ray Baldacchino / 18 October 2015

    While balance transfer credit cards are not free because you normally have to pay a fee, they are still a cheap way to borrow money. Plus you can have the money you borrow transferred to your bank account instead of using it to pay off a balance on another credit card, although the fee tends to be higher.

  • Ronald stevens / 18 October 2015

    Just remember all banks insurance companies etc etc want one thing and one thing only your money ☺

  • Phil / 18 October 2015

    Only fools and rich people use credit cards

  • Patricia Cullup / 18 October 2015

    Please check Myth2 - there is an error. Minimum should read maximum in 1 instance.
    I was already aware of these aware of these facts.

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    ADMIN: Thank you for pointing this out - it has now been amended.

  • Richard Cureton / 18 October 2015

    A 3% fee for 3 years interest free borrowing is equivalent to under 2% per year, if you only pay the minimum repayment. What's not to like ?
    Don't understand your remark "Which? estimates fees add up to £334 each year".

  • mike / 18 October 2015

    But people like Marbles and a few others advertise Balance transfers, BUT refuse to from other high interest companies like Cash Plus when a member tries to move balance from Cash Plus & the like, buy stating go to ATM and draw the cash??? do it that way!