Most balance transfer deals come with a balance transfer fee. Normally 1 to 3% of the balance to be transferred, this will reduce the money you save so it’s important to do the sums. For example, if you transferred a balance of £1,200 and the card had a 2% balance transfer fee it would equate to £24.
Borrowers need to take the balance transfer fee into account to work out how much money they would save by switching to a 0% balance transfer card. For example, say you had a £1,200 balance on a card charging an interest rate of 18% and you repaid £100 a month. It would take 14 months to clear the debt and you’d pay a total of £122 in interest.
If you switched the debt to a card charging 0% interest for 12 months with a 2% fee (£24), and continued to pay £100 a month, you’d repay the debt in 13 months and have saved £98 (£122 minus £24).