balance-transfer-credit-cards-combi

Combine credit cards with a balance transfer

Information verified correct on December 8th, 2016

Reduce interest and repay your debt faster by using a balance transfer to combine your credit cards onto one account.

With different interest rates and statement due dates to consider, juggling balances on several credit card accounts is usually expensive and hard to manage. What’s more, it can make the debt seem like a never ending part of your life.

When this is the case, one simple solution to consider is a balance transfer. This allows you to combine all your credit card debts and could even give you a low or 0% interest rate during the introductory period. Here, we look at how this debt consolidation option works, and what you need to consider if you want to combine and pay off your card debts for good.

How does combining credit cards with a balance transfer work?

A balance transfer lets you transfer your existing credit card balance(s) onto a new card. Balance transfer credit cards regularly offer low or 0% interest rates for an introductory period, for example “0% interest for 15 months”. At the end of this period, any balance remaining will be charged interest at the standard variable rate for that card.

When you apply for a balance transfer credit card, you can request that some or all of your existing card debts be moved to the new account. If you’re approved, you’ll only have to make one repayment a month, and can enjoy a lower rate of interest on the balance during the promotional period. Combining your credit card debts can also help you save on other costs, such as annual fees. This can assist in reducing your overall debt expenses and make it easier to systematically pay off what you owe.

What to consider before combining credit cards with a balance transfer

Here are some key factors to consider with this type of debt consolidation:

  • Low or 0% interest promotion periods. Balance transfer offers can be as short as three months or as long as two years. The more debt you have, the longer the balance transfer offer you’ll need to consider to help reduce your fees while you pay off the debt.
  • Standard interest rates. Also called the “revert rate”, this refers to the interest rate that will apply once the promotional period is over. Make sure this rate is one you can live with if you think you’ll carry a balance beyond the introductory period.
  • Balance transfer limits. The amount of debt you can transfer is based on the credit limit you’re approved for with the new card. For example, some cards restrict your balance transfer amount to a percentage of your credit limit, such as 75% or 90%. This could have an impact on your transfer if you have a lot of existing debt.
  • Balance transfer fees. Some cards charge a one-off fee for balance transfers, which could be between 1–3% of the total approved transfer. For example, if you have two cards with a combined debt of $6,000, moving it to a card with a balance transfer fee of 2% would cost you $120.
  • Other balance transfer restrictions. Your new card provider may impose its own set of rules around balance transfers, for instance by limiting the number of accounts you can balance transfer at one time, or the type of account you can move across. A more generic restriction might be the inability to transfer balances between affiliated credit card providers, or between cards issued by the same institution. Learn more about which banks you can balance transfer to and from to avoid potential problems.
  • Credit rating. As with all types of credit card, most balance transfer card applications will require that you have a good to excellent credit score. Find out more about your credit file and how to improve your credit score.
  • Ongoing card features. Also consider other features of the card, such as the annual fee and any complimentary extras that may ensure its suitability and sustainability as your long-term credit card.

Saving money by combining credit cards with a balance transfer

To illustrate how transferring credit card debt works, let’s look at Tom who currently has two credit cards he is trying to pay off:

  • Card 1 debt: $2,000 with a 20% p.a. interest rate
  • Card 2 debt: $4,000 with an 18% p.a. interest rate

These cards also have annual fees of $50 and $200 respectively.
Tom is considering consolidating both cards with a balance transfer credit card offer of 0% p.a. for 15 months, with an annual fee of $150. Tom has only been making minimum payments on his current cards. But if he is able to repay the consolidated debt within the interest-free period, in one year he estimates that he will save:

  • Interest: $1,120 (which is $2,000 x 20% + $4,000 x 18%)
  • Annual fees: $100 (which is $50 + $200 - $150)

This is a total of $1,220 in the first 12 months, or $1,400 if factored over 15 months. Note that these figures could vary slightly depending on the minimum payments, but offer an accurate guide to the savings Tom would get by combining his credit cards onto this new balance transfer card.

balance transfer

Steps for combining your credit card debt with a balance transfer

Follow these simple steps if you’re looking to consolidate your debts using a balance transfer.

  1. Find out the total amount of debt you owe. Take inventory of your credit card liabilities by summing them up. It is safer to do this by calling your card company as your previous month’s statement or even your online statement may not reflect accruing interest for the month and other possible impending fees. You don’t want to leave small amounts owing after the balance transfer has been completed. Explain that you wish to do a balance transfer and ask for your total outstanding balance.
  2. Compare balance transfer credit cards. This is an important step, and you should take your time to research the available options on the market. Consider the list of factors outlined above during this process.
  3. Begin the application. Applications are mostly online these days, and take around 10–15 minutes to complete. Make sure that you meet the card’s eligibility requirements, and have all the necessary details on hand.
  4. Include details of your existing credit card debts. It’s important that you get this section of the application correct by filling in the outstanding amounts for each account at the time of applying.
  5. Submit your application. Submit your application and keep those fingers crossed. Most online applications will provide you with an outcome in a few minutes. If your application is successful and you have provided all the required documents, you can look forward to receiving your new card in about two weeks.
  6. Activate the card. Upon receiving your card, activate it by following the attached instructions. This will also activate the balance transfer, which usually takes between 5–10 business days to process.
  7. Confirm the transfers and close your old accounts. Once your balance transfers have been completed, you should see that your previous account balances are $0. Call your former credit card providers and close your old accounts to avoid any further fees or the temptation to use them.

A balance transfer can be very helpful when you’re struggling with multiple credit card debts. If you’ve decided to go ahead with this process, make sure you carefully research the market, compare available card offers and weigh up your options before choosing the right balance transfer credit card for you.

Top balance transfer credit card offers*

Rates last updated December 8th, 2016.

NAB Low Fee Card

Balance transfer and purchase rate offers have been extended until 22 January 2017.

October 3rd, 2016

NAB Low Rate Credit Card

Balance transfer and purchase rate offers have been extended until 22 January 2017.

October 3rd, 2016

Virgin Australia Velocity Flyer Card - Balance Transfer Offer

Balance transfer offers has been extended until 16 January 2017.

November 1st, 2016

View latest updates

Jonathan Choi Jonathan
$
% p.a.

Your search criteria didn't return any products. Click to reset your filter options and search again
Balance transfer rate (p.a.) Purchase rate (p.a.) Annual fee Interest Saved
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
0% p.a. for 18 months 20.74% p.a. $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
0% p.a. for 15 months 19.99% p.a. $149 p.a. Go to site More info
ANZ Platinum Credit Card - Exclusive Offer
Receive a low introductory offer of 0% p.a. on purchases for 3 months and 0% p.a. on balance transfers for 12 months. Also, enjoy an annual fee waiver in the first year.
0% p.a. for 12 months 0% p.a. for 3 months (reverts to 19.74% p.a.) $0 p.a. annual fee for the first year ($87 p.a. thereafter) Go to site More info
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on purchases and balance transfers for 15 months. This card also comes with a low annual fee.
0% p.a. for 15 months with a one off 3% balance transfer fee 0% p.a. for 15 months (reverts to 13.99% p.a.) $59 p.a. Go to site More info
NAB Low Fee Card
Enjoy a low introductory rate of 0% p.a. on balance transfers and purchases for 15 months.
0% p.a. for 15 months with a one off 3% balance transfer fee 0% p.a. for 15 months (reverts to 19.74% p.a.) $30 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
0% p.a. for 18 months 1% p.a. for 12 months (reverts to 13.24% p.a.) $55 p.a. Go to site More info
Virgin No Annual Fee Credit Card
No annual fee for the life of the card with $100 cashback and a 0% p.a. offer on balance transfers for 18 months. Spend criteria applies for cashback offer.
0% p.a. for 18 months with 2% balance transfer fee 18.99% p.a. $0 p.a. Go to site More info
American Express Essential Credit Card
Receive a $50 credit on eligible spend and get Smartphone screen insurance combined with a no annual fee for life card. Also enjoy a 0% p.a. balance transfer rate for 12 months.
0% p.a. for 12 months with 1% balance transfer fee 14.99% p.a. $0 p.a. Go to site More info
Bank of Melbourne Vertigo Visa Credit Card
Enjoy a low annual fee combined with 0% p.a. balance transfer offer for 18 months and 1% p.a. for up to 12 months on purchases.
0% p.a. for 18 months 1% p.a. for 12 months (reverts to 13.24% p.a.) $55 p.a. Go to site More info
BankSA Vertigo Visa
A low interest rate card with a low annual fee, a long term balance transfer offer of 0% p.a. for 18 months and an introductory offer of 1% p.a. for 12 months on purchases.
0% p.a. for 18 months 1% p.a. for 12 months (reverts to 13.24% p.a.) $55 p.a. Go to site More info
Back to top
Was this content helpful to you? No  Yes

Related Posts

American Express Essential Credit Card
American Express Essential Credit Card

Interest rate

14.99

Annual fee

0
ME Bank frank Credit Card
ME Bank frank Credit Card

Interest rate

11.99

Annual fee

0
HSBC Platinum Credit Card
HSBC Platinum Credit Card

Interest rate

19.99

Annual fee

149

Ask a Question

You are about to post a question on finder.com.au

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At finder.com.au we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the finder.com.au privacy policy, receive follow up emails related to finder.com.au and to create a user account where further replies to your questions will be sent.

Ask a question
feedback