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Consolidating debt onto an existing credit card

If you have debt on several cards and don’t want to apply for a new one, here is how you could consolidate the balances onto a card you already use.

While balance transfer credit cards are a popular way to combine and pay off debts, it’s also possible to use an existing credit card. In fact, many providers allow you to request a balance transfer onto your current card – including major banks such as Westpac, NAB, ANZ and St.George.

This isn’t always the most affordable option though, with most existing cards applying the standard variable interest rate to any debt you transfer. So if you’re thinking about getting a balance transfer on your current credit card, it’s important to weigh up the pros and cons. Use this guide to find out how the process works and the key factors that will help you decide if this type of debt consolidation is right for you.

Why would I transfer debt onto my existing credit card?

With so many balance transfer credit cards offering introductory rates of 0% p.a. for new cardholders, moving debt onto an existing card is far less common than applying for a new one. But here are some of the situations when you might want to move debt to your current card instead:

  • When you want to keep your current card. If one of your current credit cards ticks all the boxes, you may prefer to hold onto it and consolidate any other cards so that you only have to manage one account.
  • When you have a small debt. Say the balance you want to transfer is just $1,000. Applying for a balance transfer onto your existing card could end up being faster than getting a new card because you won’t have to activate or set up another account. Plus it might save you paying yet another credit card’s annual fee.
  • When you’re worried about getting approved for a credit card. If you don’t think you’ll get approved for a new credit card – or if you’ve applied and been declined – then you may want to look at consolidating debt onto an existing card. While the balance transfer application will still be subject to approval, your history with your current provider could work in your favour. You could even call them beforehand to discuss your options.
  • When your bank offers you a deal. Sometimes banks and other credit card providers will send out offers for existing customers, including balance transfer options that give you a promotional, reduced interest rate. This could be a faster alternative to applying for a completely new card.

These are just a few of the reasons people may want to consider transferring debt onto an existing card. But it’s still important to weigh up the advantages and pitfalls before taking action.

Pros and cons of transferring balances to an existing card

Pros

  • Faster process. Having an active account could speed up the balance transfer process because you won't have to wait for approval or need to activate a new card before the debt can be transferred.
  • Convenient to manage. You’ll already know when your statements are due, how much credit is available and the interest rates that apply. It could also make it easier to budget for any annual fee that applies because you'll already know when it is due.
  • Exclusive offers. Your credit card provider may be able to offer you a promotional interest rate based on your status as an existing customer.

Cons

  • No interest-free period. Balance transfers to existing credit cards rarely get a promotional 0% p.a. interest rate. Plus, the debt usually means you won’t have access to any interest-free days on new purchases.
  • High interest rates. If your existing card charges the standard variable purchase or cash advance rate on balance transfers, your debt could attract a high rate of interest as soon as it’s transferred.
  • Less available credit. Moving debt onto your existing card means it will eat into your available credit for any new purchases you want to make.
  • Limited offers. While most major credit card providers offer balance transfers to existing customers, some providers don’t allow it or may limit offers to specific customers. Contact your issuer directly to find out if you’re eligible.

How can I balance transfer debt onto my existing credit card?

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If you want to consolidate debt onto your current credit card, start by checking what interest rate will apply to the balance transfer. These details should be in your credit card product disclosure statement and on your provider’s website. You can compare the rates to those available on new balance transfer credit cards to help you decide if it’s affordable.

The actual balance transfer process can vary between providers, but generally you’ll need to follow these steps when you’re moving debt to an existing card:

  1. Contact your credit card provider and ask for a balance transfer request form for your existing account.
  2. Provide details of the debt or debts you want to transfer, including the account names, BSB numbers and the size of each debt.
  3. Read through the terms and conditions before agreeing to them.
  4. Sign the form and send it back to your provider.

Your credit card provider will then assess your application and contact you with an outcome. If your balance transfer is approved, it should be processed in a couple of weeks.

What else do I need to know?

Keep these factors in mind so you can make the most of your debt consolidation:

  • Eligible accounts. You’ll only be able to transfer debts from eligible accounts, usually existing Australian store or credit cards that are held with a different provider.
  • Credit limit requirements. Depending on your existing credit card, you could be able to transfer debt that’s worth between 70% and 100% of your available credit limit. If you already have a balance on the card, this will affect how much debt you can transfer. Similarly, if the amount you want to consolidate onto the card is higher than your credit limit, you may only be approved for a partial balance transfer.
  • Credit limit increase. If you need a higher credit limit before you can consolidate your debts onto the card, you will need to submit a credit limit increase request first. Note that this request will also be subject to credit lending criteria and approval.
  • Minimum repayments. Your minimum payments will be higher once the debt is added to your existing card account. Remember to factor this into your repayments and, where possible, aim to pay more than this amount.
  • Cancelling other cards. If you’ve consolidated debts onto one card, you can cancel the others. But remember to wait until the transfer is complete and make sure there are no additional payments due for those accounts before you try to cancel them.
  • Credit history. Applying for a balance transfer, even on an existing credit card, could impact your credit history. So remember to pay at least the minimum required each month.

While it’s possible to consolidate debt onto an existing credit card, the interest rate is usually much higher than promotional rates offered for new balance transfer cards or personal loans. So make sure you compare a range of debt consolidation options to find the most affordable one for you.

Pictures: Shutterstock

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Amy Bradney-George

Amy is a senior writer at finder.com.au with more than 10 years experience covering credit cards, personal finance and various lifestyle topics. When she’s not sharing her knowledge on money matters, Amy spends her time as an actress.

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