Discover how you can consolidate your debt and save money with a low-interest balance transfer offer.
Are you carrying high-interest credit card debt? If so, a balance transfer could be a wise way to repay your debt without the cost of high interest during the promotional period. As many providers offer balance transfer promotions, it's important to know what to look for to find the offer that is going to be of most value to you. Let's look at what a balance transfer offer is, how you can compare your options and some simple steps to getting the most out of your balance transfer offer.
How do balance transfer offers work?
A balance transfer allows you to transfer credit card debt collecting high interest to a new credit card with a low interest rate for a promotional period. These low rates can start at 0% or sit around the 5%-7% mark. This low rate will only be in place for a promotional period, which can last between 6 and 24 months, depending on the card. The promotional period usually begins as soon as your card is approved, so you'll want to start making repayments as soon as possible to take full advantage of the low rate. Once this introductory offer ends, your remaining balance will start collecting the revert rate, which is usually the much higher standard purchase or cash advance rate. The goal is to repay your entire balance before the revert rate kicks in.
Compare your options
When considering a balance transfer, it's important to compare the cards that are on the market. Ask yourself how long you think it would take to pay off the transferred debt. Use the table below to compare current low balance transfer offers. Keep an eye out for the promotional rate and the length of the promotional period. Generally, the lower the rate and the longer the period, the more you'll be able to pay off.
Balance Transfer Credit Cards Comparison
Rates last updated February 25th, 2017.
- NAB Premium Card
Balance transfer period changed from 15 to 24 months, and is valid until 31 May 2017.
January 23rd, 2017
- HSBC Low Rate Credit Card
Annual fee waiver was removed while BT offer was changed to 0% for 15 mos. until 30 June 2017.
February 9th, 2017
- Bank of Melbourne Vertigo Visa Credit Card
Balance transfer offer has been changed to 0% p.a. for 12 months and is valid until 1 May 2017.
February 21st, 2017
How to a choose balance transfer offer
There are many balance transfer offers to choose from, but there are a few important features you can compare to find the right one for you.
- The introductory rate. At the moment, most balance transfer offers have a 0% interest rate, but this can sometimes vary to other low rates. This is how much you'll have to pay on interest as well as the balance you already owe, so this is very important to consider right off the bat.
- The promotional period. Balance transfer offers generally last between 6 and 24 months. This is how long the promotional low rate will stay in place, so you'll want to consider this to ensure you can repay your entire balance before the end of the introductory period.
- Revert rate. What will the balance transfer interest rate revert to at the end of the promotional period? Your remaining balance will usually start collecting the standard interest or cash advance rate, which usually sits around the 20% mark. It's important to compare this rate to understand what you'll be paying and how your interest could grow if you're unable to repay the whole amount during the promotional period.
- Offer expiry date. Some balance transfer offers are only available for a given period, so you'll need to apply before a set date if you want to take advantage of the offer. Make sure to read the terms and conditions as soon as you see the offer to avoid missing out.
- Minimum repayment. Even if you're paying 0% interest on balance transfers, you'll still need to make minimum repayments each month. The minimum amount will vary from card to card, but you should always try to pay as much as you can. You won't be able to repay your balance by the end of the promotional period if you only make the minimum repayments, so follow a budget and pay as much as you can afford each month.
- Other costs. You'll also have to make the standard payments that come with a credit card, such as the annual fee, so make sure the savings you make with the card outweigh the fees. While you should avoid using your balance transfer credit card for purchases while you're repaying the transferred debt, consider the purchase rate in case you need to use the card for an emergency or if you plan to use it after you've repaid your debt. Some cards also charge a one-off balance transfer fee of 1-3% of your total balance when you conduct the transfer. See the relevant product disclosure statement (PDS) to confirm the costs and fees that come with your card.
Conducting a balance transfer is a straightforward process, but it's important to compare your options and understand the fees, costs and terms and conditions of the offer to take full advantage of the promotion.