Money transfer cards explained
If you have a high-cost overdraft or loan, a money transfer card could save you money on interest.
Money transfer cards are unique as you can use them to transfer money directly into your bank or building society account. They usually come with a 0% interest rate for an initial period, which can last for more than a year.
If you are consistently using your overdraft on your bank account each month, you could be paying a high interest rate. A money transfer card is interest-free for an initial period, so using this type of card to pay off your overdraft in one go could save you money. It's important to note that your overdraft balance appears on your credit report, which means lenders can see how you use it. If you regularly go beyond your overdraft limit, your credit score could drop. So, using a 0% money transfer card to pay off your overdraft and managing the repayments responsibly could have a more positive impact on your score.
If you have a loan or car finance, a 0% money transfer card could be useful for you as you can use the transfer to repay those debts, and save yourself money on their interest rates.
Money transfer cards let you transfer money directly into your bank account. This could be suitable for you if you need to pay off an overdraft on your bank account, or you could use the money to pay off a loan.
You’ll then pay off the balance on the money transfer card in instalments. Most money transfer cards offer a 0% interest rate for an initial period, which can last up to 36 months. Just bear in mind that you have to make your transfer within the first 60 days of applying for the card to qualify for the 0% rate.
You’ll need to pay an up-front money transfer fee that you have to pay any time you transfer cash from the card into your account. The money transfer fee is usually around 3% or 4% of the amount you transfer to your bank account. For example, if you want to make a £3,000 transfer, a 3% fee will cost you £90, making your card balance £3,090.
If you are accepted for the card and make a money transfer, it’s sensible to set up a standing order to pay the minimum payment each month. If you are late with a single monthly repayment the lender has the right to cancel the 0% introductory rate.
You’ll need a good credit score to be accepted for a money transfer card. If you’ve run into problems managing your money in the past, you may get declined or offered a lower 0% duration period or a higher interest rate. Read our guide onto help improve your chances of being accepted.
The 0% rate only lasts for an introductory period. You don’t have to repay in full by the time the promotional 0% rate ends, but it’s cheaper if you can. If you are still paying it off after the promotional 0% rate ends, you’ll start being charged the standard interest rate – usually around 23% APR.
You can only transfer money into your own account and if you change your mind, you’ll still have to pay the fee. Once a transfer has been processed, you usually can’t cancel and you won’t get a refund on the fee.
With a money transfer card you don’t get the same level of protection as a credit card. This means any purchases you make with the transferred money won’t be covered by the Consumer Credit Act.
Sophie is our editorial expert who makes information about personal finance easier to understand.