For people carrying a balance on a credit card who want to stop paying interest long enough to actually clear it. Credit cards are useful when paid in full each month and corrosive when not — typical APRs above 20% mean a sizeable chunk of each payment disappears as interest before the balance moves. This guide focuses on the two tools that break that cycle: understanding how the interest accrues, and using a 0% balance transfer. For choosing between payoff methods, see the debt repayment guide.
How credit card interest actually accrues
Credit card interest is calculated daily on the outstanding balance. That has a practical consequence: paying earlier in the billing cycle saves money, and the minimum payment is set deliberately low (often 1–2% of the balance) so that interest consumes most of it and the balance lingers for years.
- £3,000 at 18% APR: roughly £45 of interest a month before any principal is touched.
- £10,000 at 22% APR: roughly £180 of interest a month — meaning a £200 payment barely moves the balance.
The 0% balance transfer
If your credit file is reasonable, you can move the balance to a card charging 0% for an introductory period (often 12–24 months). You pay a transfer fee of around 2–3%, but interest freezes for the whole period — so every pound you pay reduces the principal. The discipline is essential: divide the new balance by the number of 0% months and pay exactly that each month, so the debt is gone before the promotional rate ends.
Worked example: £5,000 at 20% moved to a 20-month 0% card
- Transfer fee at 3%: £150 → new balance £5,150.
- Monthly payment to clear in 20 months: £257/month, all reducing principal.
- Interest if left at 20% and paying £250/month: roughly £800 over the same period.
- Result: a £150 fee saves around £650 in interest and clears the debt faster.
The trap that undoes the transfer
The single biggest failure mode is behavioural: you transfer the balance, then start spending on the now-empty old card. Within months you have the new loan and a fresh balance. The moment you transfer, close or freeze the old card. A balance transfer is a tool for clearing debt, not a licence to borrow more.
When a transfer is not available
If your credit score is too low to be accepted for a 0% card, a transfer is not an option. In that case, focus on the Avalanche approach — pay minimums on everything and throw all spare cash at the highest-APR card — and consider whether a consolidation loan at a lower rate is possible. Some providers will agree a temporary hardship plan or reduced rate if you call them; there is no harm in asking.
Limitations
Balance transfer cards require a sufficient credit score and the promotional lengths and fees vary by provider and change over time. Missing a payment on a 0% card can end the promotional rate immediately. This is educational, not advice; for persistent debt you cannot service, contact StepChange. Target your cards with the Debt Snowball Calculator. Card guidance at MoneyHelper: Credit cards.
Written and maintained by Shaun da Silva, Finance Consultant. Learn how we ensure accuracy and quality in our Editorial Policy.