Low Rate Balance Transfer Credit Cards

How Do Low Rate Balance Transfer Credit Cards Work?

What does a low rate balance transfer credit card offer?

A low rate balance transfer credit card offers a low interest rate deal on balances transferred from other credit cards.

If you have any outstanding credit card balances that you would like to consolidate or pay off more slowly without the worry of hefty interest charges, then a low rate balance transfer credit card may be for you.

Low rate balance transfer credit cards will allow you to repay your existing card balances more slowly and you will be able to benefit from a much lower rate of interest than you are currently being charged.

What different low rate balance transfer credit cards are available?

There are a range of different low rate balance transfer credit cards to choose from, they can vary between the rate of interest offered on balance transfers and also the period over which this low rate will be applied.

Some low rate balance transfer credit cards offer a low interest rate fixed for the life of the balance, so you can benefit from this low interest rate until you have repaid your balance in full, perfect for when you want a little extra time and do not want the worries of ending promotional periods.

A number of low rate balance transfer credit cards do charge a handling fee on the balance you are transferring. This fee is usually around 2% of the balance, with most capping this fee at a maximum charge of around £50. However, even if you take out a low rate balance transfer credit card that charges a handling fee on balance transfers, this will be small change in comparison to the interest charges you are paying on your current credit card.

What to consider when choosing a low rate balance transfer credit card:

When comparing low rate balance transfer credit cards there are things you should look for, and things you should watch out for!

1. What is the interest rate offered on balance transfers?
• Tip: Look for the lowest interest rate offered on balance transfers.
2. How long does the low interest rate apply?
• Tip: If you want to pay off your balance slowly, without the worry of ending promotional periods or having to re-move your balance again, choose a 'fixed for life' or 'life of balance' deal, these cards offer a low interest rate until you have repaid your balance in full.
3. Is there a handling fee on balance transfers?
• Tip: Some low rate balance transfer credit cards now charge a handling fee on any balances you are transferring. This is usually around 2% of the balance and is often capped at a maximum of £50. Don't be too put off by these charges though, as they will be small change in comparison to the interest charges you may be paying on your current credit card.
4. How long do you have to transfer your balance?
• Tip: Most low rate balance transfer credit cards operate a 'window-period' in which you need to transfer your balance in order to qualify for the low promotional rate. This time period is usually around 3 months, but it's worth checking the terms and finding out how long you have. If you want to play it safe, transfer your balance during card application, or as soon as your account is opened.
5. How will payments made to the card be allocated?
• Tip: Many credit cards will allocate payments you make to promotional or lower rate balances before any standard or higher rate balances. In other words, if you are making use of a low rate balance transfer deal you may need to clear this balance in full before you can repay any purchase or cash withdrawal transactions you make with the card. Our advice is to use a separate credit card for any purchase or cash withdrawals you may need to make, so you can repay these balances whilst still benefiting from your low rate balance transfer deal.
6. Is the interest rate on balance transfers fixed or variable?
• Tip: If the interest rate is variable it will fluctuate inline with the Bank of England's base rate, whereas a fixed rate will remain the same for the length of the offer or until you have repaid your balance in full.
7. Is there an annual fee?
• Tip: Few credit cards charge an annual fee, and they are usually limited to air mile credit cards. However, it is important to find out, especially if you will be purely using the credit card for a balance transfer.

Compare low rate balance transfer credit cards