What is a balance transfer?

A balance transfer moves debt from one credit facility to another — usually onto a credit card offering a promotional rate. It is typically done to reduce the interest being paid on existing borrowing.

Transferring your debt to a 0% credit facility, such as a credit card, means you will not pay interest on the balance for a set period of time. The longest 0% balance transfer deals currently available in the UK offer up to 36–39 months interest-free, although most come with a transfer fee of around 2.5% to 3.5% of the amount moved. Shorter deals of six to 12 months are still common and may come with lower fees.

It's worth noting that balance transfer activity reached its highest level in nearly 20 years in early 2025, with around £1.8 billion transferred in a single month — the highest since February 2005. This indicates two things: people are actively trying to manage their debt, and lenders are competing strongly for that business. Both of these facts are important when you're deciding whether this option is right for you.

• No interest for a set period: You will pay no interest during the promotional period, which means your payments go towards reducing the balance rather than interest. This can help you reduce the debt faster.
• Lower monthly payments: Your monthly payment may be reduced, freeing up cash for other essentials.
• Debt consolidation: You can consolidate multiple debts into one account, meaning you only have to make a single monthly payment. It's a bit like having all your mess in one room rather than scattered around the house.

To put the potential saving in perspective, research from MoneySuperMarket estimates the average person could save around £405 by moving credit card balances to a specialist balance transfer card. TotallyMoney found that, with the average interest-bearing balance of around £3,002, improvements in balance transfer lengths could represent potential savings of up to £1,568

• Transfer fees: You may have to pay a fee to transfer your debts, typically between 2.5% and 3.5% of the balance. On a £10,000 transfer, that's £250 to £350 before you've even started.
• Credit limit may not cover everything: You may only be able to transfer some of your debts if the credit limit offered is not high enough. This means you may still have to make payments on some debts outside the balance transfer.
• High interest after the 0% period: Once the interest-free period ends, the balance will usually revert to the card's standard interest rate — often around 24–25% APR or higher. This means you could end up paying significant interest if the debt is not cleared before the promotional period ends.
• Missed payments can cancel the deal: The 0% offer may be withdrawn if you miss a payment, pay late, or exceed your credit limit. This means interest may start being charged on the balance again. Research suggests millions of UK credit card holders have lost promotional deals early because of missed repayments or other breaches of the terms.

We have some deeper concerns about this if it is not managed properly, which can be best explained by introducing Diane…

When a lender offers you a 0% interest balance transfer, they do so hoping you'll pay interest later. They often stand to gain significantly more than they would normally. The offer aims to attract your business, with the hope of keeping it long-term.

This isn't speculation. As Giles Andrews, then CEO of Zopa, put it: “Credit card companies know full well that around half of customers may not pay off the full amount and are betting against you to fail from the start.”

Research has estimated that around £443 million in interest is charged on balances that remain after 0% balance transfer offers expire. In other words, hundreds of millions of pounds are earned because many borrowers do not clear their balances before the promotional period ends.

It's a business model and recognising this should influence how you approach the decision.

Our concern about transferring your debts to a 0% credit card relates to the remaining cards, which now have available credit.

If you haven't resolved the underlying issues causing your debt, the 0% balance transfer may only serve as a temporary solution, and you could end up in an even worse position later on, just like Diane.

Emotional Spending: The Hidden Driver Behind Debt

Diane's story highlights an often overlooked issue — the emotional triggers behind spending. A 2026 study by Updraft revealed that the average UK adult spends £236 each month on purchases motivated solely by emotion, amounting to £2,832 annually. Among those who had experienced credit card debt, 45% reported that impulsive or mood-driven spending contributed to their situation.

The emotions that drive the most spending might surprise you. Happiness costs UK adults the most (£297 per month in emotional purchases), followed by anger (£274), loneliness (£254), and anxiety (£245). Stress, work problems, and relationship breakdowns were all identified as key triggers, which is exactly what happened to Diane after her breakup.​

Research indicates that millions of people in the UK struggle with compulsive or addictive shopping behaviours, with some estimates suggesting around 8 million adults are affected. If spending is your way of coping, a 0% balance transfer does not resolve the core issue — it simply moves the debt. When those old credit cards are still sitting there with available credit, the temptation to spend again can be hard to resist.

When a 0% Balance Transfer Can Work — And When It Can't

0% transfers can be beneficial if you stay disciplined and have a solid plan to pay off the debt during the promotional period. However, if you're prone to overspending, having available credit might be an irresistible temptation. Without a clear, committed plan, you risk ending up worse off than before. Diane's experience illustrates this point that.

Here's a quick test before you apply:

• Can you realistically pay off the full balance within the 0% period? Divide the total (including the transfer fee) by the number of months. Can you afford that monthly payment?
• Will you cut up or freeze the old cards? If your answer is "probably not," that's a red flag.
• Are you spending emotionally? If you use shopping to cope with stress, loneliness, or sadness, a balance transfer won't address the root cause.

If you answered no to any of these, a 0% balance transfer may cause more harm than good.

The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.