Balance transfers: The things you should know

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If you’re looking to get your finances in order throughout 2012, one of the balance transfer credit cards available could help. MBNA is just one of the providers that make it quick and easy to apply online for this type of card, but it’s always best to find out as much as you can in advance.

What is a balance transfer?

Do you have store or credit cards that have high interest rates? Are you having trouble making your monthly payments? If so, a balance transfer will help you slow down and take stock of your debts. Part or all of the money you owe will be transferred to a credit card with a lower rate of interest and this will help you manage your finances more efficiently. Not only will you have less money to pay back, but (with some credit cards), you’ll receive a 0 per cent balance transfer rate for an introductory period – which will help you get things paid off a lot quicker.

Example of a balance transfer

If you have a balance of £1,000 outstanding on a store card that charges interest at 26 per cent APR, you could move this to a card which charges 0 per cent on balance transfers for the first twelve months. This can save you a lot of money in the long-run (if you make regular payments) and will enable you to clear your debt in good time – without accumulating extra charges. You can even transfer money onto a football, charity or rugby credit card and will be able to support your favourite team – while organising your finances.

Are there any fees I should be aware of?

Most credit card issuers charge a handling fee of around three per cent to do a balance transfer. This might be off putting, but you could still save money if there is a promotional interest of say 0 per cent. Please note; the interest rate will normally jump to the standard rate for balance transfers once the promotion has ended, so it’s wise to pay off the transfer balance as soon as possible.

How do I arrange a balance transfer?

If you’re an existing customer, you can usually request a balance transfer online or over the phone. You’ll need to provide details of the account/s you are transferring from, so make sure you keep these near buy. Remember, you can transfer debt from more than one credit or store card, so long as you’re within your agreed credit limit.

A balance transfer credit card can leave you with more money every month, so it’s worth finding out more today.

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