EyeOnThe short answer
Sometimes, but not always. The transfer fee, promotional period, later rate and repayment timing determine whether moving the balance reduces overall costs. A transfer does not erase the debt.
What it means
The new card or account pays off the old balance, and you then owe the new provider. Some offers include a period with a low or zero rate on the transferred amount, after which a standard rate applies.
Transfers usually carry a fee, often shown as a percentage of the amount moved.
How it works
The benefit depends on whether the interest saved during the promotional period is larger than the fee, and whether the balance can be repaid before the standard rate begins. New spending on the account may be charged at a different rate than the transferred balance.
Payments are often applied to balances in a set order, so check which balance your payments reduce first.
A simple example
Moving 3,000 with a 3% fee costs 90 up front. If the old card charged 24% APR, a month of interest on 3,000 would be about 60, so over a 12-month promotional period the interest avoided could be several times the fee, provided the balance is cleared in that time. If 1,000 were still owing when the standard rate began, interest would resume on it. These are illustrations.
Things worth checking
- Work out the fee and the standard rate that applies after the promotional period.
- Missing a payment can end the promotional rate early.
- Applying involves a credit check and acceptance is not guaranteed.
- Transferring a balance does not reduce the debt; it only changes where it is owed.
How it varies by country
Availability, fees and promotional lengths vary widely by country and provider, and some countries do not offer them.