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.
Let’s look at these 5 Balance Transfer credit card deals for July 2019
Citi Rewards Platinum Balance Transfer Offer
The Citi Rewards Platinum has a 0% balance transfer offer for 26 months with a one-off 1.5% balance transfer fee. By far the strongest 0% balance transfer in market. This card is great for consolidating your debts as you can transfer non-Citi personal loans (including car loans), credit cards and/or store cards onto the new account. Credit limits go up to $100,000 and you can transfer up to 80% of your approved limit to take advantage of the 0% BT offer. It also comes with a rewards program that earns up to 1.25 points per $1 spent, complimentary international travel insurance, transit accident insurance and membership to the Citibank Dining Program that offers a complimentary bottle of wine when you dine at partner restaurants.
The Citi Rewards Platinum has a standard purchase rate of 20.99%, a cash advance rate of 21.74% and pay no annual fee the first year ($199 annual fee thereafter). The balance transfer rate reverts to the cash advance rate at the end of the introductory period. Overall, the range of features and long BT period make this card a very competitive option.
HSBC Platinum Credit Card Balance Transfer Offer
HSBC has two offers on the same HSBC Platinum Credit Card, one is a 0% purchase offer and the one featuring here comes with a 0% p.a. on balance transfers for 22 months with no balance transfer fee. It gives you 2 Airport lounge passes every year with LoungeKey and complimentary travel insurance. If you spend more than $6,000 a year the annual fee of $129 p.a. is refunded. Offer ends 30 September 2019.
Virgin Australia Velocity Flyer Credit Card
The Virgin Australia Velocity Flyer comes with 0% p.a. for 18 months on balance transfers with $0 balance transfer fee. Low $50 ongoing annual fee (Usually $129 p.a.). That’s a $79 saving each year. Add to this an annual $129 Virgin Australia gift voucher and you have a great offer. Earn 0.66 Velocity points per $1 spent up to $1,500 per month then 0.5 Velocity points per $1. A bonus 3 additional Velocity Points per $1 on your everyday spend in the first 3 months (capped at 10,000 Points per month). Offer ends 31 August 2019.
St.George Vertigo Platinum Balance Transfer
The St.George Vertigo Platinum headlines a 0% p.a. on balance transfers for 18 months with a $0 balance transfer fee. $49 annual fee first year – save $50. Even though this card has the lowest purchase rate listed here on purchases, it has some premium card features. You can get up to 6 months overseas travel insurance. Add to this purchase cover insurance, extended warranty insurance and Visa Platinum Concierge 24/7. Top it off with up to 3 additional cardholders at no extra cost. All St.George credit cards are Google Pay enabled. Offer ends 2 October 2019.
ANZ First Balance Transfer
The ANZ First headlines a 0% p.a. on balance transfers for 18 months with a 2% balance transfer fee. The low $30 annual fee is great for a balance transfer offer. The lower the annual fee the better when it comes to saving on fees. It comes with 90-Day Purchase Security Insurance and Extended Warranty Insurance. The ANZ First is also eligible with Apple Pay, Samsung Pay and Google Pay.
Finding the Best Balance Transfer Offers
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.
What is a balance transfer offer?
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.
When would you need a balance transfer offer?
There are many reasons why you may consider a balance transfer offer. Choosing the right balance transfer card could allow you to:
- Regain control over your finances,
- Clear your debt,
- Save on interest,
- Improve your credit worthiness to apply for other forms of credit, such as a home loan,
- Streamline your credit cards to save time and reduce hassle,
- Switch to a card that better suits your needs.
How do you know if you are eligible for a balance transfer offer?
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.
What should you be aware of with a balance transfer offer?
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.
- How long does the introductory period last? A longer offer should give you more time to pay off your transferred balance. When choosing a longer offer, use that time wisely. Don’t put off paying off your balance just because you think you have more time.
- What is the introductory interest rate? Obviously, the lower the introductory rate, the more you can save on interest. 0% balance transfer offers provide a better opportunity to pay down your transferred balance, while paying less in interest.
- What does the balance transfer revert to? Find out what rate of interest your transferred balance will attract if it remains unpaid at the end of the introductory period. Some cards revert to the purchase rate, while others revert to the higher cash advance rate.
- What rate of interest will you pay on new purchases? Consider the card’s purchase rate, and be aware that some cards do not offer ‘interest free periods’ when you have a balance transfer. If you are using your card day-to-day, this could mean your credit card spending attracts more in interest, making the total more difficult to pay off.
- What will you pay in annual fees? If you choose a high-end card, the annual fee you pay may also be high. To help you save money, you may be better off choosing a card with a good balance transfer offer, fewer features and a lower annual fee.
- Is there a balance transfer fee? Balance transfer fees are quite common. These fees are typically one-off, and add a percentage of the transferred amount to the cardholder’s overall balance to be paid off.
- How much can you transfer? Some balance transfer cards allow you to only transfer up to a percentage of your approved credit limit.
- What features are offered? Depending on your circumstances, you may want to choose a card that offers fewer features for a lower fee so you can focus on paying down the transferred balance. However, if you have the funds to pay down the balance transfer while still using the card as normal, you may find value in a card with more features.
- Can you earn rewards? Rewards cards reward spending. But, if you are spending to earn points, you may not be giving your full attention to paying down your transferred balance. If you have the money to pay down your transferred balance while paying off your new balance as well, earning rewards is great. If you’re struggling to cover either, a more basic card with a good balance transfer offer may be a better option.
What potential mistakes should you avoid?
To deal with a balance transfer offer correctly, there are two important mistakes to avoid. The first involves lack of research.
- Don’t just go for the first offer you find. You need to shop around to find the best balance transfer offer and the best card for your needs. Happily, CreditCard.com.au makes this easy. With a wide range of balance transfer cards on offer, you can compare all the options side by side, to find the right one for you.
The second mistake involves not paying off the transferred balance and ending up in more debt.
- According to ASIC’s review, many cardholders use their balance transfer wisely, paying down their balance to clear their debt and save on interest. Others, however, increase their debt, either by spending on the old card with the cleared balance, or by not paying down the transferred balance and letting it continue to accumulate interest after the introductory period ends.
How do you choose the best balance transfer offer?
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.
How do you make a balance transfer offer work 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.