Balance transfers

If you want to keep all of your credit card borrowing in one easily manageable place, if you need more time to repay what you owe on existing credit cards or if you're currently paying a high interest rate on store cards or other credit cards, a balance transfer could help.

A balance transfer moves your balance from an existing credit or store card to another card with a different provider.

With a balance transfer you can move multiple credit card balances onto a single credit card giving you one monthly payment to manage; or move your balance to a card with a lower interest rate potentially reducing your borrowing costs and giving you more time to pay off your balance.

The minimum balance you can transfer is usually a £100, and to leave room for any potential interest or fees, the maximum amount is usually 93% of your credit limit.

There are two main costs you'll pay:  your transfer fee -  a percentage of the amount you're moving added on to your balance when you make the transfer;  and interest - based on your balance transfer interest rate which you'll pay over time until you clear your balance. 

You can find balance transfer credit cards with interest rates as low as 0% for a set period of time as part of an introductory or promotional offer but once the offer runs out your remaining balance will be charged at your standard balance transfer interest rate until repaid.

At Bank of Scotland, we will always tell you your balance transfer fee and interest rate upfront.

Now let's look at a practical example of how a balanced transfer with an introductory or promotional offer works. Jamie has just got a brand new credit card with a 0% balance transfer interest rate for 12 months on all transactions made in the first 90 days. 

His balance transfer fee is 3%. Jamie also has £2000 of existing balances spread over two cards both with annual interest rates of 20% per annum. If Jamie keeps his balances on his current cards paying £200 per month every month it will take him 11 months to clear them and he'll pay £187 in interest.

But if he moves his balances to his new card with a 0% percent introductory balance transfer interest rate,  paying his 3% transfer fee he could clear his balances faster by paying £206 pounds per month,  he could clear his full balance in 10 months paying a £60 transfer fee with no interest charges at all.

In total, Jaime could save around £127 using his 0% interest rate offer on balance transfers. This is based on a few key assumptions firstly that… Jamie starts with a balance of £0; that Jamie never breaks his card terms and conditions; that he makes no other transactions on his new card during this time, and finally that he clears his full balance before his 0% interest rate offer ends.  In the right circumstances, a balance transfer can help you manage your borrowing all in one place but first always consider your options to make sure it's the right choice.

Thanks for watching.  Visit www.bankofscotland.co.uk/credit cards for more information.