Can I balance transfer a personal loan to a credit card?

Which banks allow a personal loan balance transfer?

There are a few credit card providers in Australia that allow you to balance transfer personal loan debt to a credit card – including Citi, Coles, Qantas Money and Virgin Money. Most other credit cards that offer 0% balance transfer rates only let you move debts from other Australian credit cards, store cards or charge cards.

What are the benefits of transferring a personal loan balance to a credit card?

While it does depend on the size of the debt, the balance transfer offer and the card, below are some of the potential benefits you could get with this option.

• Save money.Balance transfer credit cards give you a chance to save money on interest charges by offering a low or 0% introductory interest rate.
• Pay off your personal loan debt faster. Paying low or no interest on a balance transfer card means that more of your repayments go directly towards the principal debt (rather than interest charges). This gives you a chance to pay off your debt in a shorter amount of time.
• Longer balance transfer offers. Balance transfer credit cards offer introductory interest rates for up to 24 months (or sometimes longer). Depending on the amount of debt you owe and the repayments you can afford to make, you may even be able to pay off your personal loan debt before this period ends, avoiding higher interest charges in the process.
• Pay off all your debts at once. You may be able to consolidate debt onto one credit card so that you only need to make one repayment each month. Plus, you’ll only have to deal with one interest rate for all of your debt.

What should I think about before transferring personal loan debt?

Take a look at the following factors to help you decide if this option will work for you.

• The length of the introductory period. To get the most out of a balance transfer offer, you need to pay off the entire debt before the end of the low or 0% balance transfer period. Otherwise, the card's standard rate will apply to any remaining debt. You can divide your debt by the number of months in the introductory period to get an idea of the repayments required to clear your debt within the offer period. If you think it will take longer than that to pay off the balance, you could think about sticking with your current personal loan or compare other debt consolidation loans to find an option that's affordable for you.
• Balance transfer fees. Some credit cards charge a one-time fee for processing balance transfers. This fee depends on the balance transfer offer and the card and is usually around 1% to 3% of the total debt you transfer. If you still owe a lot on your personal loan, you may want to compare credit cards with no balance transfer fee to avoid the added cost.
• Fees and charges on your old account. As the balance transfer process can take a couple of weeks to complete, you'll need to continue making payments on your existing account/s until the debt is transferred. Some personal loans may also apply early exit fees or other charges when your debt is transferred. Make sure you check with your loan provider before doing a balance transfer so that you know exactly how much it will cost.
• The revert rate. At the end of the introductory period, the low promotional interest rate for balance transfers will revert to a standard variable rate. This is usually the purchase or cash advance rate for your card, so aim to pay off your balance before this rate applies.
• Keeping your old account open. Once the debt is transferred to your new credit card, make sure you close the personal loan account to avoid any additional fees or charges.
• Making purchases during the introductory balance transfer period. If you use your new balance transfer credit card to make purchases, the standard purchase rate will apply to those charges, and any repayments you make will be allocated to these debts before your balance transfer debt. If that happens, you could end up carrying the balance until after the introductory period ends, so try to focus on paying off your existing debt before using your card for spending.

How can I make sure I'm eligible to transfer my personal loan to a credit card?

Each card has different requirements that you need to meet, but generally they will include the following:

• Meet the credit card application criteria. You’ll need to meet the eligibility criteria for the specific credit card you’re applying for, including the minimum age, Australian residency status, credit score requirements, as well as the minimum income requirements.
• Request a balance transfer from eligible accounts. You are only eligible to balance transfer existing debts if they are from a different Australian financial institution to the one you’re applying with. For example, you can’t transfer a Citi personal loan debt to a Citi credit card. Citi may also refuse to process a balance transfer request when it is from another Citigroup account.
• Make sure the debt is in your name. The name for your credit card and balance transfer debt must match. This means you cannot request a balance transfer from an account held by someone else, such as your partner. Check out this guide for options that allow balance transfers from a spouse or partner.
• Check the balance transfer limits. There may be minimum and maximum limits for your balance transfer. For example, Citi, Coles and Virgin Money state that you must balance transfer at least $500 per request, and you can transfer up to 80% of your credit limit. This means if you were approved for a credit card with a $10,000 limit, you could balance transfer up to $8,000 to the account.

Frequently asked questions about balance transferring a personal loan to a credit card

I want to consolidate my debts. Is it better to use a debt consolidation loan or a balance transfer credit card?

This depends on how much debt you have and what you're eligible for. Typically, balance transfer credit cards will allow you to transfer a smaller amount than that debt consolidation loan. Balance transfer cards might also be harder to get approved for since the lender can't change your rate. If you're tossing up between the two, remember that loans generally provide a fixed interest rate that is applied from the time the loan is approved. Whereas balance transfer credit cards provide a low or 0% introductory interest rate before standard rates are applied, which can give you an interest-free period.

If I transfer my personal loan to a credit card, would the debt be considered a personal loan debt or a credit card debt?

After you successfully balance transfer your personal loan to a credit card, that debt will be considered as a credit card debt.