For balance transfers, there’s usually a fee for a promotional offer. The fee is worked out as a percentage of the amount you transfer. We add it to the total amount you owe us when you take up the offer.For example on a balance transfer of £2,500:
0% sounds like a good offer. And it can be, but only if you’re sure you’ll be able to manage your account properly. By this, we mean staying under your credit limit and paying at least your minimum amount on time every month. If you don’t manage your account properly, you’ll lose your promotional rate and it could have an effect on your credit rating.
It’s easy to forget a date that might be in two years’ time, so add a note to your calendar. That way, you can check you’re on target to pay off your balance transfer before your offer ends.
Important because… if you still haven´t paid off your balance by the end date, your interest rate jumps up to the standard purchase rate.
Setting up a Direct Debit can help you keep your promotional rate by ensuring that you always make a payment on time every month.
Important because… Paying the minimum amount on time each month means you’ll avoid default fees and keep your promotional interest rate. However, to pay off your debt as quickly as possible, you should pay more than your minimum amount each month. Setting up a regular fixed payment could help you to do this.
Here's an example of a customer transferring £2,500 to a 37 month balance transfer card with a 1.49% transfer fee. It assumes that there are no other transactions on the account, payments are made on the payment due date and the account remains within its credit limit.
|Monthly payment||Balance remaining after promotional offer ends|
|Direct Debit set up to pay the minimum payment only (Note: Your first minimum payment would be £57 which falls each month as the overall amount you owe reduces)||£1,093|
|Direct Debit set up to pay a fixed amount of £57 each month||£428|
|Direct Debit set up to pay a fixed amount of £71 each month||£0 (this will cover both your balance and the transfer fee within the 37 months)|
Make sure you have enough available balance in your account to avoid going over your credit limit.
Important because… if you go over your credit limit in any month during the promotion, you'll lose your promotional rate from the date you went over it. It will also have an effect on your credit rating
In most cases, you should avoid any new spending on your card while you’re paying off a promotional balance.
Important because… if you have a balance transfer without a promotional rate for purchases, you won’t get the normal interest-free period of up to 56 days for purchases.