The difference between a money transfer and a balance transfer
Written by
Emily Tye
Reviewed by
Amy LancashireA balance transfer moves existing credit card debt onto a new credit card. A money transfer moves cash from a new credit card into your bank account. Both typically come with a 0% promotional period and a one-off transfer fee, but they solve different problems.
| Balance transfer | Money transfer |
|---|---|---|
Where the money goes | To another credit card | To your bank account |
Best for | Clearing existing credit card debt | Clearing a fixed, one-off debt that is not on a credit card |
Existing card debt required? | Yes | No |
What is a balance transfer?
A balance transfer lets you move existing debt from one or more credit cards onto a new card, typically to benefit from a lower or 0% interest rate. You pay a one-off fee when you transfer, and your repayments then go toward reducing the actual balance rather than covering interest charges.
Discover more about balance transfer credit cards.
Pros
The 0% interest-free period means your repayments go directly towards reducing your debt.
Interest savings can be significant if you are currently paying a high standard APR.
You can consolidate multiple card balances into one monthly payment.
The money goes directly to the card provider, so there is no risk of spending it on something else.
Cons
A transfer fee applies upfront.
If the balance is not cleared before the 0% period ends, remaining debt reverts to the card's standard APR.
Applying for a new card leaves a hard search on your credit file, which can temporarily affect your score.
For more information, read our guide on how a balance transfer can affect your credit score.
What is a money transfer?
A money transfer lets you move cash from a money transfer card directly into your current account. Unlike a balance transfer, you are not shifting debt between cards. Instead, you are borrowing cash which you can use to clear debts that are not on a credit card, such as an overdraft.
Pros
Can clear debts that are not on a credit card, such as a bank overdraft or a bill where credit cards are not accepted.
Can come with a 0% interest period, meaning you pay no interest provided you clear the balance before the promotional rate ends.
Cons
A transfer fee applies upfront. If your current debt carries a low rate, check whether the fee outweighs the interest you would save.
If the balance is not cleared before the 0% period ends, the remaining debt reverts to the card's standard rate.
The cash lands in your current account, not directly with the creditor. That makes it easy to spend on something other than the intended debt. If you use a money transfer to clear an overdraft but continue to overspend, you can end up with both an overdraft and a credit card balance to manage.
Applying for a new card leaves a hard search on your credit file, which can temporarily affect your score.
Which should I use?
Consider a balance transfer if you have existing debt on one or more credit cards and want to reduce the interest you pay while you clear it.
Consider a money transfer if you have a fixed, one-off debt that is not on a credit card (such as an overdraft) and you are confident you can repay the full amount within the 0% window.
If your debt is ongoing rather than a fixed amount, neither product addresses the underlying problem. It is worth getting a clear picture of what you owe before applying for either. Our guide on how to pay off credit card debt is a useful starting point.
FAQs
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
