If you have credit card debt you want to pay down, a balance transfer offer could help you get a handle on it. Allowing you to pay less in interest over an introductory period, balance transfer cards can help streamline your credit card debt, while you focus on clearing that balance.
Dealt with correctly, a balance transfer offer could allow you to reduce your credit card debt significantly, while saving on interest overall. Then, once you’re back on track, you can begin to develop a healthier relationship with credit. Interested? Check out our top picks on balance transfers for this month to find the best balance transfer card for you.
As a feature-packed rewards card, the Citi Rewards Credit Card certainly has a lot to offer, especially when you take into account its excellent balance transfer deal. It’s by far the strongest 0% balance transfer in market. As a new cardholder, you can benefit from 0% p.a. on balance transfers for 30 months, transferring up to 80% of your approved credit limit from non-Citi cards. No balance transfer fee applies.
But that’s not all – this card also has a reduced annual fee of $49 for new cardholders in the first year, offering a saving of $100. In terms of everyday rewards earning, cardholders can earn 1 Citi Point per $1 spent on purchases at home and overseas, and 2 Citi Points per $1 spent on their Linked Diners Club Card. Some other handy extras include a free bottle of wine when dining at participating restaurants within the Citibank Dining Program, complimentary overseas travel insurance and retail cover, and access to interest savings via the Citi instalment plan.
The Virgin Australia Velocity Flyer allows new cardholders to save on interest while half the annual fee first year. When you apply for this card, you get 0% p.a. on balance transfers for 26 months. You can transfer over non-Citi personal loans, lines of credit and credit cards. Your total balance transfers may not exceed 80% of your credit limit, and any balance remaining reverts to cash advance rate. Pay half the annual fee the first year $64, reverts to $129 p.a. thereafter and you get an exclusive $129 Virgin Australia Gift Voucher each year. Offer is valid until 29 January 2021.
Currently offering new cardholders the opportunity to save on balance transfers, the ANZ Low Rate Card has 0% p.a. on balance transfers for 25 months with a 1.5% balance transfer fee. Cardholders can transfer up to 95% of their approved credit limit, with unpaid transferred balances reverting to the cash advance rate. As for the annual fee, it’s low at $58 p.a. and for a limited time you pay no annual fee the first year. You can add up to 3 free additional card holders.
As a low rate card with a modest $59 annual fee, the Westpac Low Rate Credit Card could be the perfect choice for cardholders looking to take advantage of a 0% balance transfer on a low cost card. With this card, you can benefit from 0% p.a. on balance transfers for 24 months, with a one off 1% balance transfer fee to pay. Balance transfers must be requested at application, and may include up to three non-Westpac Australian-issued credit, charge or store cards. Unpaid transferred balances revert to the card’s cash advance rate. On top this long balance transfer offer, you can get $200 cashback when you spend $1,000 on eligible purchases in the first 90 days of approval. Offer ends 31 March 2021.
Currently offering new cardholders the opportunity to save on balance transfers, the St.George Vertigo Card has 0% p.a. on balance transfers for 24 months. No balance transfer fee. Cardholders can transfer a minimum of $200 up to 80% of their approved credit limit, with unpaid transferred balances reverting to the cash advance rate. As for the annual fee, it’s low at $55 p.a. (waived first year) and you can add one free additional card holder. Balance transfer offer ends 30 March 2021.
Paying down credit card debt isn’t easy. If you have large amounts owing on a number of cards, it may seem almost impossible to get on top of it. When you carry a balance on a credit card, this is known as having a revolving debt, as it never gets fully paid off. And, as you are continuously paying interest on that unpaid debt, it can become even more difficult to clear.
Carrying a balance on a credit card can be stressful, not knowing which card to pay down first, especially if you are struggling financially. It can also mean you pay much more in interest than you need to. If you clear your credit card balance by each monthly due date, you should pay zero interest. But, if you carry a balance, you could end up paying hundreds or even thousands of dollars in interest.
According to ASIC’s review into credit card lending, released in July 2018, 18.5% of consumers in Australia are struggling with credit card debt. As of June 2017, there were almost 550,000 people in arrears, an additional 930,000 with persistent debt, and an additional 435,000 people repeatedly repaying small amounts. So, what’s the solution?
While switching to a low rate credit card may work best for some cardholders, a balance transfer offer could provide a more appealing option for others. Offering a break from interest for a specified period of time, a balance transfer offer allows cardholders to focus on paying down their debt faster, potentially reducing stress while helping them to save on interest.
A balance transfer offer is an introductory offer providing reduced interest rates on balances transferred from other credit cards. Designed to help cardholders pay down their credit card debt by switching to a new card, a balance transfer offer allows cardholders to pay low or no interest on their transferred balance over a specified introductory period, during which time they can concentrate on paying down the balance.
There are many reasons why you may consider a balance transfer offer. Choosing the right balance transfer card could allow you to:
Comparing balance transfer offers means knowing what to look for. But, there is no point digging deeper into an offer if you’re not eligible for it in the first place. Credit card providers generally have eligibility requirements for all of their cards, whether there is a balance transfer offer on the card or not.
Before you apply for a balance transfer card, check the eligibility requirements carefully. First and foremost, balance transfer offers are designed to attract new cardholders. Which is why providers will typically not allow a balance transfer from one of their own cards. This usually applies to providers under the same ‘umbrella’ as well, for example Westpac and St.George.
Read the small print on the card to find out whether you are eligible for the balance transfer offer, and eligible to apply for the card. Eligibility requirements on the card may require new applicants to meet minimum annual income requirements and have a good credit history, which may cause issues for those who have defaulted in the past.
If you want to choose the right balance transfer offer for you, it’s important to know what to look for. Aside from eligibility requirements, here are some factors for you to consider as you compare balance transfer offers.
To deal with a balance transfer offer correctly, there are two important mistakes to avoid. The first involves lack of research.
The second mistake involves not paying off the transferred balance and ending up in more debt.
Choosing the best balance transfer offer means comparing the options. So, how do you sift through all the options available to choose the offer that best suits your needs?
The credit card market is changing all the time, so offers often change according to market competition. Sometimes, the competition in balance transfers is intense, so there will be plenty of 0% balance transfer offers over long introductory periods. At other times, balance transfer offers may not be so popular, so it may not be as easy to find a good offer.
Providing you with the latest balance transfer offers, CreditCard.com.au makes it easy to compare what’s available, to then narrow your options. You can find the offer that provides you with the time you need to pay down your debt, at the lowest possible interest. While keeping in mind the above factors, you can find and apply for the balance transfer card that works best for you.
Making the most of a balance transfer offer is all about making it work for you. There are some awesome balance transfer offers out there, but they all require effort on your part to get the most out of them. Here are some simple tips to help you get the most out of your balance transfer card, so you can clear your debt and develop a healthier relationship with credit.
Tip 1. Cancel your old credit card.
When you transfer a balance from an existing card, that card remains open until you choose to close the account. It’s a good idea to cancel the card as soon as the balance has been transferred to avoid the temptation of spending on it.
Having a card in your wallet with a zero balance and large credit limit available can make it tempting to spend. But, if you do that, you will have an even bigger debt to pay off, with interest continuing to accrue on your new balance on the old card.
Tip 2. Work out a repayment plan.
A balance transfer offer really only benefits you when you use it to pay down debt. Don’t get side-tracked, thinking you have ages to pay off your transferred balance. That introductory period will be over before you know it.
Instead, set up a repayment plan that allows you to pay off your transferred balance within the introductory period. Using a repayment calculator can help you with this, allowing you to work out how much you will need to pay back each month.
Then, be as strict as possible, sticking to your plan as your budget allows. Setting up an automatic repayment could make this easier, transferring a set amount out of your bank account and onto your credit card after each payday.
Doing this should encourage you to pay off as much of your transferred balance as possible. The aim is to clear the entire transferred balance by the end of the introductory period, before interest starts accruing.
Tip 3. Consider whether you want to spend on the new card
Paying off your transferred balance should be your main focus. If you can only afford to pay off that much each month, it may be best to avoid spending more on the card until the balance transfer is cleared.
When you use the card to make new purchases, you have to be able to pay off that balance before interest starts accruing, or you may end up in more trouble with your credit card debt. Be aware that some credit cards don’t offer interest free periods when there is a balance transfer on the card, which may make it harder to pay off the balance on new spending.
While it may seem like hard work, paying off your existing credit card debt can provide plenty of benefits. Make your balance transfer card work for you by choosing the right card and dealing with it correctly. Start by comparing your options and apply today.
Founder of Creditcard.com.au. Roland has extensive knowledge about credit cards in Australia. Known as a credit card expert, he has been featured on tv and in various publications. Some popular offers on our site right now include the ANZ Low Rate. This special offer has no annual fee first year, a low purchase rate and long 0% balance transfer. Have a look also at the huge 0% for 30 months balance transfer from Citi with no balance transfer fees.
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