What is a balance transfer?
How you can use a credit card to help manage your finances.
If you’re looking to keep all of your credit card borrowing in one easily manageable place. If you need more time to repay what you owe on existing credit cards or if you’re currently paying a high interest rate on store cards or other credit cards a balance transfer could help.
A balance transfer moves your balance from an existing credit or store card to another card with a different provider.
Balance transfers can help you move multiple credit card balances onto a single credit card, giving you only one monthly payment to manage. Or to move your balance to a card with a lower interest rate, potentially reducing your borrowing costs and giving you more time to pay things off.
You can transfer a balance as little as £100, the minimum amount usually allowed. While the maximum is usually 93% of your credit limit to leave room for any potential interest or fees.
There are 2 main costs of a balance transfer:
- Your transfer fee, which is a percentage of the amount you’re moving added on to your balance at the time of the transfer.
- And interest, which you’ll pay over time until your balance is cleared. This is based on your balance transfer interest rate.
Sometimes, you’ll find a credit card with an interest rate as low as 0% for a set period of time as part of an introductory or promotional offer. But once the offer runs out, any remaining balance will be charged at your standard balance transfer interest rate until repaid.
To help you make an informed decision, at Lloyds Bank we’ll always tell you your balance transfer fee and interest rate up front.
Now, let’s see how a balance transfer with an introductory or promotional offer works in practice with help from Elliott.
Elliott has just got a brand-new credit card offering him a 0% balance transfer interest rate for 12 months on all transactions made in the first 90 days. His balance transfer fee is 3%.
Elliott also has £2,000 of existing balances spread over two cards both with annual interest rates of 20% per annum.
If Elliott keeps his balances on his current cards, paying £200 per month every month, it will take him 11 months to clear them and he’ll pay £187 in interest. But if he moves his balances to his new card with the 0% introductory balance transfer interest rate, paying his 3% transfer fee he could clear his balances faster.
If he pays £206 per month, it’ll only take him ten months to clear his balance and he’ll pay the £60 transfer fee with no interest charges at all. This means that, in total, Elliott could save around £127 using his 0% interest rate offer on balance transfers.
But we’ve made a few assumptions.
Firstly, that Elliot started with a balance of £0.
That Elliott never breaks his card terms and conditions. That he’s made no other transactions on his new card during this time.
And finally, that he clears his full balance before his 0% interest rate offer ends.
If you plan ahead and consider your options, a balance transfer can be a useful way to help you manage your borrowing all in one place.
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Visit lloydsbank.com/creditcards for more information.
Why is a balance transfer useful?
A closer look at balance transfers
You may be charged a balance transfer fee
Your balance transfer fee is usually worked out as a percentage of the balance you’re moving across. If you make multiple balance transfers, you’ll likely be charged for each one.
You’ll also pay interest, depending on your rate
You might get an introductory interest rate for a set period of time. Or, you might pay your standard balance transfer rate. Either way, the sooner you clear your balance, the less interest you’re likely to pay.
You can’t transfer between two cards with the same provider
For example, you can’t transfer your balance from one Lloyds Bank credit card to another. There are also some store cards you can’t balance transfer from, so check with your provider beforehand.
The minimum balance you can transfer is £100
On the other hand, the maximum varies from person to person depending on your overall credit limit and credit available at the time.
How to make a balance transfer with us
If you’re an existing Lloyds Bank customer, simply log on to Internet Banking or the Mobile Banking app to see what balance transfer offers are available to you. Remember, you can’t transfer balances between two Lloyds Bank credit cards.
You should also make sure that you:
- Have read the terms and conditions and understand your fees and interest rates.
- Know all of the relevant card details, such as credit card numbers.
- Have your phone to hand, as you’ll be required to complete a security check.
Frequently Asked Questions
Once approved, the transfer should arrive on the next working day.
The lowest credit card balance you can transfer is usually £100. The maximum amount is usually up to 93% of your credit limit.
Remember, you may pay an interest rate and fee each time you complete a balance transfer.
To complete a balance transfer with a Lloyds Bank credit card, you’ll need a few things to hand:
- All of the card details for both cards, including credit card numbers.
- Your phone, as you’ll need to complete a security check using it.
- If applying online, you’ll need Internet Banking log on details.
At Lloyds Bank, you can make a transfer from most credit cards and some store cards (those which display the Mastercard®, American Express®, or Visa® logo), but not from other Lloyds credit cards, loan companies or bank accounts.
The easiest way to find out for certain is to check with your credit card provider.
Important legal information
Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.