How many credit cards can you move to a balance transfer credit card? Read on to discover whether you can consolidate all of your debts under one account
The average Australian has more than $3,000 of credit card debt. This makes us one of the biggest borrowers in the world. This debt is typically spread between 2.2 credit cards, which means most of us carry more than one card at a time. If you're looking to consolidate your debts under one account, a balance transfer credit card could be the answer.
Your 'credit limit' determines how much debt you can transfer over
Most providers allow you to transfer debts from multiple credit cards, though the total transfer must not exceed the balance transfer limit. In most cases, lenders will only let you transfer a percentage of the credit limit (between 70% and 100%). For example if you are approved for a credit limit of $5,000 and the maximum balance transfer limit is 85% of the credit limit, then the bank will allow you to use $4,250 for balance transfers. Most providers allow you to transfer between 2-5 balances to the one account, though this will vary from provider to provider. As long as your total transfer balance doesn't exceed the balance transfer limit, you should have no issue transferring debts from multiple credit cards.
Why get a balance transfer?
There are several advantages to consolidating your credit card debt, the most obvious of which is the low interest rate. If your card comes with a promotional balance transfer rate, you can expect a low or no interest rate on balance transfers for six to 24 months. This allows you to pay the debt off faster without the cost of high interest. If you were paying 15% on a $5,000 debt, transferring it to a 0% card will save you $750. Rolling your debts into one account also makes it easier to manage, meaning you only have one set of repayments to make and balances to track.
How to conduct multiple balance transfers
Most balance transfer applications will provide more than one section in the application for you to fill out the details of multiple balances. If the application only has the option list two accounts, for example, contact the provider to confirm whether you can request an additional account to be added to the application. Here you'll need to provide your account details and the amount you're transferring from each account.
You'll need to contact your banks to get a total You'll need to organise the closure of your accounts once you've completed the balance transfer. If you don't close your accounts, you'll still have to pay the maintenance fees (such as the annual fee).
Depending on the card, you may also be charged a balance transfer fee (usually of 2-3% of the balance amount) when completing the transfer.
How to use the Balance Transfer Calculator below in 4 easy steps and learn how much you can save today
Step 1. Enter the total debt/outstanding amount you would like to transfer
Step 2. Provide the interest rate that you are paying on your existing debt (if you don't have your interest rate on you, the average is around 18-20%)
Step 3. See the 'Interest Saved' column to find out which credit cards will save you the most money. Click on the 'Interest Saved' title to sort the cards in ascending or descending order of money saved
Step 4. Compare the credit cards available in the table provided to find the card that suits your needs. If you still want to find out more about a particular credit card, click the ‘More info’ link for a full review on the features and benefits.
Balance Transfer Calculator and Comparison
Other balance transfer tips
Start repaying immediately
Because the low introductory rate lasts six to 24 months, you have a limited time to repay your balance in full. Once the promotional period ends, your remaining balance will begin collecting the revert rate (usually the standard interest or cash advance rate) which can exceed 20%.
If you're sure you can pay off your transferred debt before that happens, you don't have to worry about the revert rate. Taking our $5,000 example, you will have to pay $416.67 per month if you have a 0% rate for one year, or $833.33 if it's a six-month deal. If you are only able to pay back half, the other $2,500 will be subject to, say, a 20% rate, or an extra $500.
Don't use your balance transfer card for purchases
There are many reasons you shouldn't be using your balance transfer credit card for anything but debt consolidation. Your purchases will be paid off before your existing debt as the purchase amounts will be collecting a higher standard rate than the promotional balance transfer rate. Interest-free days on purchases are also not awarded when you have an outstanding balance.
Just remember, the clock is ticking and you have to use every day you get with a balance transfer promotional rate of interest to reduce your credit card debt.Back to top