Got personal loan debt and want to repay it with 0% interest? Here’s everything you need to know about balance transferring a personal loan to a credit card.
Balance transfer credit cards give you an opportunity to save money and pay off debt faster, with low or 0% interest rates during the introductory period. While most of these cards allow you to move debt from existing credit, store and charge cards, there are only a few options if you want to balance transfer a personal loan debt.
Currently, Citi and Virgin Money are the only credit card providers on the Australian market that let you transfer a personal loan balance to a credit card. Here, we look at the steps to transfer a personal loan debt to a credit card, the key factors to consider and compare the types of cards available for your needs.
Compare cards that let you transfer a personal loan to a credit card
Citi Credit Card Offer
Earn reward points from the Citi Rewards Platinum Credit Card and a low interest rate of 0% p.a. for 24 months on balance transfers.
- $49 p.a. annual fee for the first year ($149 p.a. thereafter) annual fee
- 20.99% p.a. on purchases
- 0% p.a. for 24 months with 1.5% balance transfer fee on balance transfers
- Cash Advance Rate of 21.74% p.a.
- Up to 55 days interest free
- Minimum Income Requirement of $35,000 p.a.
Virgin Money Credit Card offer
The Virgin Australia Velocity Flyer Card offers a low interest rate on balance transfers and bonus Velocity Points in the first three months on purchases for a limited time.
- $64 p.a. annual fee for the first year ($129 p.a. thereafter) annual fee
- 20.74% p.a. on purchases
- 0% p.a. for 18 months on balance transfers
- Cash Advance Rate of 20.99% p.a.
- Up to 44 days interest free
- Minimum Income Requirement of $35,000 p.a.
What are the benefits of transferring a personal loan balance to a credit card?
- 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 on your debt and interest charges). In turn, 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. 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. If you’re dealing with several debts, you may be able to consolidate them 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.
Types of credit cards that Citi and Virgin Money offer to transfer your personal loan
Both Citi and Virgin Money provide a range of credit cards that allow you to balance transfer personal loan debts. The types of cards available include:
- Rewards credit cards. These cards offer rewards points and frequent flyer points per $1 spent on new purchases. If you choose a rewards card for your balance transfer, remember that new purchases will accrue interest, which could mean that it will take you longer to pay off the personal loan debt. Generally, it’s ideal to pay off your balance transfer debt before focusing on earning points.
- No annual fee credit cards. Both Citi and Virgin Money have credit cards with no annual fees for life, allowing you to save money on additional card fees when you balance transfer your personal loan to a new credit card.
- Low rate credit cards. These cards provide a low standard variable interest rate for purchases, which can help you save money on charges for new transactions. Keep in mind that both Citi and Virgin Money apply the cash advance rate to any balance transfer debt that remains at the end of the introductory offer, so the low ongoing rate only applies to new purchases.
- Premium credit cards. If you’re interested in the benefits and status of a gold, platinum or black credit card, you may want to consider options such as the Velocity High Flyer or the Citi Prestige for exclusive benefits including travel insurance, concierge services and airport lounge access.
How can I make sure I'm eligible to transfer my personal loan to a credit card?
There are key criteria you need to meet to balance transfer your personal loan to a credit card. These requirements can vary between cards, but generally 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, residency status, credit score requirements, as well as the minimum income requirement.
- Transfer from an eligible bank. 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. The debt you transfer must also be in the name of the primary account holder for the new credit card (i.e. you).
- Ensure your debt meets the balance transfer limit. There may be minimum and maximum limits for your balance transfer. For example, both Citi 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 Citi or Virgin Money credit card with a $10,000 limit, you could balance transfer up to $8,000 to the account.
How to apply for a personal loan balance transfer with Citi
Citi allows you to balance transfer debt(s) from credit cards, store cards, lines of credit and personal loans to a new Citi credit card. If you meet the eligibility requirements, you can transfer your personal loan balance to a Citi credit card by following these steps:
- Find your card. Compare a range of Citi credit cards and choose the one that suits your needs.
- Apply. Click “Go to site” on this page to be taken to a secure online application page.
- Fill out the application. You will also need to provide the details of your balance transfer request and the following details:
- The name the account is held in
- The type of card or account (ie personal loan)
- The account number
- The amount of debt you want transferred
- The name of the issuing organisation
- The Biller Code and Reference Number
- Submit your application. If you’re approved, you will be issued with your new credit card within 10 working days.
- Activate. Activate the card so that Citi can begin the balance transfer process. This could take another 10 working days.
- Confirmation. Wait for confirmation of the completed balance transfer, then close the personal loan account, making sure you pay any fees that may be applied for paying out the debt or ending the loan term early. These costs will depend on the personal loan you’ve chosen, so make sure you check the Product Disclosure Statement and factor in any additional charges before you go ahead with this process.
- Repay. Start making payments to your Citi credit card. If possible, aim to pay off the debt before the end of the introductory period so that you can avoid higher interest charges.
Citi also provides balance transfer offers to existing credit card customers. If you already have a Citi credit card, you can see if you’re eligible by signing in to your account and selecting “My Offers”, or by calling Citi on 13 24 84.
How to apply for a personal loan balance transfer with Virgin Money
Virgin Money also allows you to balance transfer debt(s) from personal loans, lines of credit, credit cards and most store cards when you apply for a new Virgin credit card. You can apply for a personal loan balance transfer to a Virgin Money credit card using the following steps:
- Find your card. Compare Virgin Money credit cards and choose the one that suits your needs.
- Apply. Apply online and include details of your personal loan account and the amount of debt you want to transfer to the card.
- Submit your application. If approved, your new card will be issued within 10 working days.
- Activate the card. Virgin Money will then complete the balance transfer process.
- Repay. Start making payments on your new Virgin Money credit card.
Virgin Money also allows you to request a balance transfer at the promotional interest rate for up to 30 days after card approval. To do this, just call 13 37 39 and provide your Virgin credit card details, your balance transfer account details and other information as requested.
If you’re an existing Virgin Money credit card customer, you can find out about balance transfer offers by logging in to your account and going to the “Offers” section, or by calling 13 37 39.
What should I be wary of when transferring my debt?
- 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. Both Citi and Virgin Money apply the standard cash advance rate of interest to balances remaining after the introductory period, and usually this rate is more that 20% p.a. Check specific cards for more details and aim to pay off your balance before this rate applies.
- Making purchases during a balance transfer offer. 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.
- Balance transfer fees. Some Citi and Virgin Money credit cards charge a one-off fee for processing balance transfers. This fee may depend on the balance transfer offer and the card. At the time of writing, the Citi Rewards Platinum card applies a 1.5% balance transfer fee while the Virgin Money No Annual Fee card charges a 3% balance transfer fee.
- Know who you can balance transfer to. You can’t transfer a Citi debt to a Citi credit card and you can’t transfer a Virgin Money debt to a Virgin credit card. Both Citi and Virgin Money also require a minimum of $500 per balance transfer request and allow you to transfer up to 80% of your credit limit.
Frequently asked questions about balance transferring a personal loan to a credit card
Is there a limit to how much I can transfer?
Yes. Both Citi and Virgin Money allow you to transfer up to 80% of your approved credit limit. For example, if you had a personal loan debt of $8,000, you would need to get a $10,000 credit limit to balance transfer the full amount. On the flipside, you must balance transfer at least $500 when you apply for a Citi or Virgin Money balance transfer offer.
I want to consolidate my debts. Is it better to use a debt consolidation loan or a balance transfer credit card?
The type of account you use for debt consolidation depends on your individual circumstances. However, you may want to note that debt consolidation loans generally provide a fixed interest rate that is applied from the time the loan is approved. Balance transfer credit cards, on the other hand, provide a low or 0% introductory interest rate before standard rates are applied, which can give you an interest-free period. Consider comparing a range of loan and credit card options to find one that suits your personal circumstances.
Does the promotional rate end if I miss making a repayment?
No. If you miss a repayment you will be charged the late payment fee. Your promotional rate will continue to run until its expiration date.
If I transfer my personal loan to a credit card, would the debt be considered a personal loan debt or a credit card debt?
If you successfully balance transfer your personal loan to a credit card, that debt will be considered as a credit card debt.
With competitive low or 0% introductory interest rate offers, balance transfer credit cards give you an opportunity to save money on interest charges and pay down existing debt faster. Now that you know which credit cards allow you to balance transfer personal loan debts, you can compare a range of options and find one that suits your needs.