The purpose of a 0% balance transfer and 0% purchase rate credit card is to enable you to pay off an existing credit card debt while still being able to make interest-free purchases. When used responsibly, these credit card deals can provide cardholders with relief from interest on their debt.
Exclusive to finder.com.au - Citi Credit Card Offer
Citi Rewards Platinum Credit Card - Exclusive Offer
0% p.a. interest for 13 months on purchases and balance transfers Discounted annual fee of $49 for the first year Exclusive to finder.com.au
Offer ends 31 December 2019
Eligibility criteria, terms and conditions, fees and charges apply
Exclusive to finder.com.au - Citi Credit Card Offer
Save with 0% p.a. interest on purchases and balance transfers (with no balance transfer fee) for up to 13 months and a discounted annual fee for the first year.
$49 p.a. annual fee for the first year ($149 p.a. thereafter).
21.49% p.a. on purchases
0% p.a. for 13 months with 0% BT fee on balance transfers
How do 0% balance transfer and 0% purchase rate credit cards work?
Let's start by looking at what happens when a 0% interest rate offer applies to a balance transfer only.
Purchases typically attract interest with a balance transfer offer.
Balance transfer offers can be very tempting and can help you take control of your debt. However, people often fall into the trap of using the balance transfer credit card to make purchases. Cards that only include a balance transfer offer do not include any interest-free days on purchases. If you use the card for this purpose, you can quickly increase your debt rather than reducing it.
Here's why: When you make a payment with your card, the debt on your credit card that attracts the highest interest rate will be paid off first. Because there's a purchase rate but no balance transfer rate, you'll end up paying off any new purchases before your debt is reduced. You might think that your repayments are making a massive dent in your historical debt, when in fact you are only paying off your new purchases.
0% purchase rate and 0% balance transfer cards let you repay your debt and make interest-free purchases.
The combination of a 0% balance transfer and a 0% purchase rate card solves this consumer pitfall. It eliminates the possibility of you getting hit with interest on purchases, as long as the purchases are made during the introductory offer period.
How to compare 0% balance transfer and 0% purchase rate credit cards
When comparing cards, it's important to select the type of card that is most suited to your circumstances. Let's take a look at the main features of these cards and examine what you should be looking for and how certain factors can work against each other.
Types of 0% balance transfer and 0% purchase rate credit cards
No two 0% balance transfer and 0% purchase rate credit card offers are the same. They're available across a variety of cards, so the different annual fees, revert interest rates and card classes can help you with your decision-making.
Reward cards. It's rare for reward cards to offer this kind of deal. Generally, only trimmed-down reward cards will offer the full 0% on balance transfers and 0% on purchases. They might come with complimentary insurance and other helpful but low-key privileges.
Reduced annual fee for the first year. Even a cursory glance at the above comparison table shows that many of the 0% balance transfer and 0% purchase rate offers have a reduced annual fee for the first year. This can be very helpful if you want to keep your upfront costs low while you knuckle down to paying off your debt.
Platinum cards. Platinum credit cards are targeted at higher income customers and they often require a shining credit history. In return, you get higher credit limits as well as more valuable extras, which often include complimentary overseas travel insurance.
Classic cards. Classic credit cards are a good choice for people on a lower income. They are usually a no-frills option with lower annual fees than platinum cards.
Low rate cards. These are a popular offering in the 0% balance transfer and 0% purchase rate scene, as purchases on these cards usually revert to a relatively low interest rate after the introductory offer period is over.
Your 0% balance transfer and 0% purchase rate credit card will be a huge boon during its initial offer period, but only if you make effective use of it. Keep in mind the main dos and don'ts when using this type of card:
Transfer your balance quickly. Though the introductory promotional period may last a number of months, your opportunity to actually make a balance transfer at the promotional rate may be limited to a shorter period of time, such as within the first 30 days. The longer you leave it, the less time you'll have to enjoy avoiding interest. Take advantage of the offer by transferring your balance during your card application.
Know how to make the transfer. If you don't transfer your balance during your application, you can apply online, over the phone or via hard copy, once your card arrives.
Pay off your balance in good time. If the introductory offer lasts for six months, then make sure you are budgeting like mad to ensure that the balance on your 0% balance transfer and 0% purchase rate credit card is paid off in full before the offer period expires. You will be charged the revert interest rate on any unpaid balance, which could be higher than 20%. However, if you find that you won't make it by the cut-off date, it may be worth considering transferring the balance again to another similar card from a different bank.
Don't make this a habit. Making one 0% interest balance transfer after another to avoid paying interest will be noted in your credit history. Your credit rating may drop due to regular credit applications and the assessors of your credit file may well read into your habits and reject your applications for any more credit.
Don't make any cash transactions. Cash transactions aren’t often included in 0% interest promotional offers, and when they are, they still carry very expensive cash advance fees.
Things to watch out for when considering this type of offer
Revert interest rates. Be aware of the spike in interest that you can expect at the end of the promotional offer period. The remaining balance transfer amount will be charged either the higher cash advance interest rate or the purchase rate. If you know the balance won't be paid in full by that time, consider swapping cards or think about how you will budget for the extra costs. Interest on new purchases will also revert to the purchase interest rate at the end of the introductory period.
Cash transactions. This is never a good idea with any credit card and it's usually never included in a 0% offer. Even if cash transactions are included, there will still be a cash advance fee for every transaction of this type. This is an extra charge of around 2-4% of the transaction amount. If the cash advance fee is unpaid by the next statement due date, it will also accrue interest at the cash advance rate.
Different offer period lengths. The length of these offers can vary, so it's worth deciding from the outset what your plans are for when the promotional period ends. Think about whether a longer promotional period would suit you, even if the interest rate offer is higher than some of the shorter, 0% offers.
Annual fee. Check that this is not way higher than average. A little higher than normal may be worth it for the benefits you receive from the offer.
Minimum monthly repayments. Pay your credit card balance in full each month whenever possible. If you can't do that, then make sure you're at least paying the minimum monthly repayment to help you avoid late fees. Calculating your own minimum monthly balance repayment is as simple as looking at what the minimum repayment percentage is (usually 2-3%) and calculating this against your outstanding balance, interest included. You can also use an online credit card repayment calculator to work out what your minimum monthly repayments will be.
During the 0% purchase rate offer period, your purchases won’t incur interest.
However, after the 0% offer period ends, you will be charged interest at the purchase rate. This will be charged from the date the transaction takes place if you’re carrying a balance from month to month, as interest-free days are waived on unpaid balances.
During the 0% interest offer period, 0% interest is applied to the outstanding balance.
After the offer period ends, if you don’t pay your balance in full by the end of the statement period, you will not receive any interest-free days on purchases you make with the card.
Interest on purchases usually reverts to the credit card's normal purchase rate. Interest on balance transfers either reverts to the purchase rate or the cash advance rate. To find out what rate your balance transfer will revert to, read the review of that specific credit card on finder.com.au.
Yes. The minimum monthly repayment must be paid each month to stop your card from going into default. If you have a balance transfer promotion that's charging 1% interest and the minimum monthly repayment is 3%, you’ll be paying off 2% of your balance each statement period.
Yes, there were such offers at the time of writing. However, offers change from time to time, so the best way to stay up to date with the latest offers is to check our balance transfer comparison page.
* The credit card offers compared on this page are chosen from a range of credit
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