What is a balance transfer and how does it work?
A balance transfer is a credit card feature that allows new cardholders to save money when they transfer a balance from an existing credit card, to enjoy a lower introductory rate of interest on that balance for a specified period of time.
Balance transfer periods typically vary from six months to two years, with introductory interest rates starting at 0% p.a. Used correctly, the right balance transfer offer could give you the opportunity to pay down more of your balance, while saving on interest.
So, if you were to choose a 12 month 0% balance transfer offer, you could transfer the balance from your existing credit card to pay zero interest on that balance for 12 months. Any balance remaining after that intro period would revert to the card’s purchase rate or cash advance rate.
Balance transfers in a nutshell
A balance transfer offer can be a fantastic money-saving tool. But, it needs to be used wisely. Compare the options on Creditcard.com.au to find the balance transfer that works best for you, then put all your energy into paying off the transferred balance. Not only could you save heaps in interest, you could also be debt-free at the end of intro period. Now wouldn’t that feel good?
Low and 0% Balance Transfer Credit Cards - Frequently Asked Questions
Presented as an introductory offer, balance transfers are designed to entice new cardholders, so there is usually plenty of competition within the market. This means you can compare a number of balance transfer offers to find the right one for you.
But to do that effectively, you need to know what to compare. Here are the most important factors you should consider when comparing balance transfer offers, to help you find the balance transfer that best meets your needs.
Balance Transfer Rate: Not to be confused with the card’s purchase rate or cash advance rate, the balance transfer rate is the introductory interest rate applied to any balances transferred onto the card as part of the balance transfer offer. Try to choose the balance transfer offer with the lowest balance transfer rate, as this should save you the most in interest.
Length of Introductory Period: Each balance transfer offer is offered over a specified period of time. Choosing the longest possible introductory period should give you more opportunity to pay down your transferred balance. Be careful not to be too relaxed with a longer introductory period. Set out a repayment plan from the start, to steadily pay down your balance and make the most of the offer.
Revert Rate: At the end of the introductory period, any transferred balance left unpaid will attract the card’s revert rate. This may be the card’s purchase rate, which is usually lower, or the card’s cash advance rate, which is usually higher. If you think you may have a balance remaining at the end of the intro period, the card’s revert rate is important. The higher the rate, the more you will pay in interest.
Balance Transfer Fee: Many cards now charge a fee on balances transferred. This balance transfer fee is either a fixed amount, or a percentage of the transferred balance. Be sure to calculate the cost of the balance transfer fee before you apply to make sure the offer is still worthwhile.
Balance Transfer Limits: When you transfer a balance, you may be limited in the amount you can transfer. This is usually expressed as a percentage of your approved credit limit. So, if you are approved for a $10,000 credit limit with a balance transfer limit of 90%, you may transfer up to $9,000 as a balance transfer.
Annual Fee: When you transfer a balance, it’s usually to save money. However, the money you are saving on interest may be cancelled out by a high annual fee, especially if you are paying off the balance transfer over a number of years. A card with a lower annual fee may help you to save more in the long run.
Some balance transfer offers allow for a number of transferred balances, while others may only allow one balance to be transferred. Check whether there is a limit to the number of balances you can transfer, and where they can be transferred from. You may be able to transfer balances from credit cards and store cards, and in some cases, personal loans.
You may find you are unable to transfer a balance from one card provider to another, especially if they are within the same financial group.
American Express | No balance transfers from other American Express accounts. |
ANZ | No balance transfers from other ANZ accounts. |
Bank of Melbourne | No balance transfers from BankSA, St.George or Bank of Melbourne credit cards as all of these banks are under the Westpac Banking Corporation. Balance transfers from Westpac are permitted. |
BankSA | No balance transfers from BankSA, St.George or Bank of Melbourne credit cards as all of these banks are under the Westpac Banking Corporation. Balance transfers from Westpac are permitted. |
Bankwest | No balance transfers from other Bankwest accounts. While Bankwest is a division of CommBank, you can still request a balance transfer from a CommBank credit card to Bankwest. |
BOQ | No balance transfers from other BOQ accounts, or from other Citi-issued credit facilities, including Citi, IMB and Suncorp Bank. |
Citi | No balance transfers from other Citi accounts or Citigroup accounts, including cards from Coles Mastercard, Suncorp Bank, IMB, Qantas Money and Virgin Money. |
Commonwealth Bank | No balance transfers from other CommBank accounts. Balance transfers between CommBank and Bankwest are permitted. |
Coles | No balance transfers from other Coles credit cards and other Citigroup credit cards. |
IMB | No balance transfers from other IMB accounts or Citigroup accounts, including Citi, Suncorp Bank and Virgin Money. |
Jetstar | No balance transfers from other accounts issued by Jetstar Mastercard, Macquarie or Card Services. |
Latitude Financial Services | No balance transfers from other Latitude accounts or its associated entities, including Gem Visa, 28 Degrees Platinum Mastercard, GO Mastercard and Latitude Infinity. |
Macquarie Bank | No balance transfers from other accounts issued by Macquarie Bank. This includes other Macquarie and Card Services accounts. |
Myer | No balance transfers from Macquarie Bank or Card Services accounts. |
NAB | No balance transfers from other NAB accounts. |
St.George | No balance transfers from BankSA, St.George or Bank of Melbourne credit cards as all of these banks are under the Westpac Banking Corporation. Balance transfers from Westpac are permitted. |
Suncorp Bank | No balance transfers from other Suncorp Bank accounts or Citigroup accounts, including Citi, IMB and Virgin Money. |
Virgin Money | No balance transfers from other Virgin Money accounts or Citigroup accounts, including Citi, IMB and Suncorp Bank. |
Westpac | No balance transfers from other Westpac accounts. Balance transfers from BankSA, St.George or Bank of Melbourne credit cards are permitted. |
Woolworths | No balance transfers from other Woolworths credit cards, Macquarie or Card Services accounts. |
Your Balance Transfer in 5 Easy Steps
Balance transfers don’t need to be complicated, especially when you have CreditCard.com.au on your side. By following these five simple steps, you can find the best balance transfer offer and make the most of your balance transfer card.
Compare
Use CreditCard.com.au to compare your options. Pay attention to the factors mentioned above to find the balance transfer offer that will best meet your needs. If you plan on keeping the card in the long term, it’s a good idea to compare other factors, such as the card’s purchase rate, and the various features on offer.Confirm Amount Owing
When transferring a balance – or a number of balances – you will need to confirm the amount being transferred to the new balance transfer card. Find out how much you are allowed to transfer over, and be sure to take into account balance transfer fees and any limits on balance transfer amounts.Submit Application
Once you’ve found the right card for you, it’s time to apply. When you apply through CreditCard.com.au, you will be directed to the card provider’s site, where you can submit your application directly. This application process can be completed online, and normally takes about ten minutes.During the application, you will usually be asked to provide information regarding the balance transfer. This typically involves providing details on the existing provider and the amount you want transferred. If your application is approved, the balance transfer will be processed by your new card provider. Be aware, it may take time to process.
Activate Your Card
Once your application has been approved, you will usually receive your new card in the post within about a week. You may receive a PIN separately, or your card provider may allow you to choose a PIN online. To use the new card, you will typically need to activate it. Depending on the card provider, this may be done online, over the phone or in branch.Confirm Transfer and Close Old Card
When you apply for the new card, your provider will advise you how long the balance transfer will take to be processed. If you have access to online banking, you can keep an eye out for the transfer to be made. If the transfer hasn’t arrived within the expected timeframe, you may want to contact your provider.Once the transfer has been processed, it’s time to close the old card account. While this is obviously not compulsory, it can be a good idea as it may help you to avoid the temptation of spending on the card and running up a new balance. Now it’s time to pay off the transferred balance. Setting up a repayment plan and automatic payments can help make this easier.
That is up to you. When you transfer a balance from an old card, it can be tempting to spend. After all, you now have a credit card with $0 balance and a full credit limit available to you. As we said before though, this can only create more problems. Avoid the temptation to spend by closing your old card, and focus on paying down your balance transfer.
Common Mistakes To Avoid
Balance transfer offers are awesome. But only if you choose the right offer, and treat it correctly. If you want to get the most out of your balance transfer offer, here are some common mistakes you should try to avoid.
Mistake #1. Thinking that 0% interest means no payments
Even with a 0% p.a. balance transfer offer, you still need to make repayments on the card. As with any credit card, you will have minimum repayments to make each statement period. If you want to pay off your transferred balance within the introductory period, it’s a good idea to set up a repayment plan, where you pay off as much as you can afford each month.
Mistake #2. Only paying minimum repayments
Only making the minimum repayments on any credit card is not recommended. Your credit card statement will show you how long it would take to pay off your debt making only the minimum repayments. By only paying the minimum, not only will you stay in debt longer – sometimes decades longer – you will also pay much more in interest, even with a balance transfer offer.
Mistake #3. Making new purchases on your card
This applies to both your new card and your old card. When you have a balance transfer offer, you should focus on paying your transferred balance off within the intro period. If you start spending on either card, you have even more to pay off month-to-month.
Worse still, any repayments on your new card automatically go towards paying off the balance with the highest interest first. So if you’re spending on that card, you may only be paying off your new balance while the transferred balance remains.
Mistake #4. Not cancelling your old card
When you transfer a balance from an old card, it can be tempting to spend. After all, you now have a credit card with $0 balance and a full credit limit available to you. As we said before though, this can only create more problems. Avoid the temptation to spend by closing your old card, and focus on paying down your balance transfer.
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