If you are carrying a balance on your credit card, you know how frustrating it can be to make payments every month and still see little progress. High interest rates make repayment slow and expensive. One of the most effective tools to escape this cycle is a balance transfer credit card.
This type of card allows you to move existing debt from one or more cards to a new one with a lower interest rate, often even 0% for a limited period. By reducing interest, you direct more of your money toward repaying the principal balance, helping you get out of debt sooner.
In this guide, you will learn how balance transfer credit cards work, their advantages, potential costs, and how to use them wisely.
What is a balance transfer credit card?
A balance transfer credit card is designed to help cardholders consolidate debt and save on interest. Instead of paying high rates of 15% to 30% on multiple cards, you can transfer those balances to one card offering:
- Low or 0% interest for an introductory period (commonly 6 to 18 months).
- A balance transfer fee, generally between 3% and 5% of the amount transferred.
- One monthly payment instead of managing several cards.
Example:
If you have AED 10,000 in credit card debt at 30% APR, you may pay around AED 250 per month just in interest. By moving the balance to a card with a 0% promotional rate for 12 months and paying a 3% transfer fee (AED 300), you could save about AED 2,700 in interest during the year.
How does a balance transfer work?
- Apply for a balance transfer card with a promotional low or 0% interest offer.
- Request the transfer, providing details of the card or cards where you currently hold debt.
- Pay the transfer fee, which is added to the new balance.
- Begin making payments on the new card, ideally planning to pay off the entire balance before the promotional period ends.
Advantages of balance transfer cards
1. Save on interest
The biggest benefit is cutting down or eliminating interest during the promotional period, which accelerates repayment.
2. Simplify debt management
Instead of keeping track of multiple payments and due dates, you consolidate everything into one card and one bill.
3. Pay off faster
Without interest draining your payments, each installment reduces your balance directly.
4. Gain short-term relief
Introductory offers provide a window of opportunity to reorganize your budget and reduce debt stress.
Costs and fees to watch out for
Even though these cards help reduce interest, they are not entirely free. Common costs include:
- Balance transfer fee: 3% to 5% of the total transferred.
- Annual fee: Some cards waive the first year but charge afterward.
- Reversion interest rate: Once the promotion ends, the card usually reverts to a high APR of 20% or more.
- Late payment fees: Missing even one payment can cancel the promotional rate.
Before deciding, compare how much you will pay in fees against the interest you would save.
Example: cost comparison
Imagine you have AED 15,000 in credit card debt.
Staying with your current card:
- APR: 28%
- Interest in 12 months: ~AED 4,200
- Total cost: ~AED 19,200
Using a balance transfer card:
- 0% promo for 12 months
- Transfer fee: 3% (AED 450)
- Interest: AED 0 if repaid within 12 months
- Total cost: ~AED 15,450
Result: you save about AED 3,750 by moving to a balance transfer card.
When does a balance transfer make sense?
Good situations:
- You carry high-interest credit card debt.
- You can realistically repay the balance within the promotional period.
- You want to simplify multiple payments into one.
Not ideal if:
- You tend to overspend and risk building new debt.
- You cannot commit to paying off the balance before the promotional rate ends.
- The transfer fee outweighs the interest savings.
How to use balance transfer cards wisely
- Do the math first. Ensure the savings exceed the transfer fees.
- Pay more than the minimum. Divide your balance by the promo period months and commit to paying that amount.
- Avoid new purchases. Most cards apply the regular APR to new spending, not the promotional rate.
- Stay disciplined. The card is a tool for debt reduction, not new borrowing.
- Keep older cards open, but inactive. Closing them may affect your credit score, but avoid adding more debt to them.
Alternatives to balance transfer cards
If a balance transfer is not right for you, consider other debt management tools:
- Debt consolidation loans: Personal loans with fixed rates and terms.
- Salary advances: Suitable for very small, short-term needs.
- Debt restructuring programs: Offered by some banks for struggling borrowers.
The bottom line on balance transfer cards
Balance transfer credit cards can be a highly effective strategy to cut interest, consolidate payments, and accelerate your journey out of debt.
For short-term repayment goals (6 to 18 months), they are usually the cheapest way to manage existing card balances. However, for long-term debt, a personal loan may be more predictable and stable.
The key is to treat a balance transfer as a temporary tool for repayment, not an excuse to create new debt. Used responsibly, it can save you thousands in interest and give you the financial breathing space you need.