Pay off your debt faster: balance transfer credit cards offer interest rates of 0% for up to 24 months. Here's how to choose the right one.
This guide explains how balance transfers work and how they can dramatically lower your credit card interest payments; the different types of balance transfer cards available in Australia; how to compare balance transfer cards to pick the best one for you; common concerns about these cards; mistakes to avoid with balance transfers; and how to increase the chances of your application is successful. You can calculate your potential savings with a wide range of cards in Australia using the table below.
Exclusive Credit Card Offer
Exclusive to finder.com.au, Virgin Money is offering a long-term balance transfer with a 0% balance transfer fee.
- Enjoy an exclusive offer of 0% p.a. on balance transfers for 18 months and no balance transfer fee (reverts to cash advance rate).
- Receive a $129 Virgin Australia Gift Voucher each year. Conditions and spend criteria apply.
- Earn up to 2 bonus Velocity Points per $1 spent in the first 3 months (capped at 10,000 bonus points per month).
- Pay a reduced annual fee of $64 in the first year, $129 p.a. thereafter.
- Eligibility criteria, T&Cs, fees and charges apply.
Balance Transfer Credit Cards Comparison
Compare finder.com.au's best* balance transfer credit cards
Compare the features of the balance transfer cards below.
|Credit Card||Balance transfer||Feature|
|Citi Rewards Platinum Credit Card||0% p.a. for 24 months with 1.5% balance transfer fee||A reduced annual fee of $49 for the first year ($149 p.a. thereafter) and Citi Rewards Points per dollar spent.|
|Virgin Australia Velocity Flyer Card - Exclusive Offer||0% p.a. for 18 months||Get a $129 Virgin Australia Gift Voucher each year, earn bonus Velocity Points per $1 spent and pay half the annual fee for the first year.|
|HSBC Platinum Credit Card||0% p.a. for 22 months with 2% balance transfer fee||A balance transfer credit card that offers all the perks of platinum. Earn HSBC Rewards Points per $1 spent.|
|NAB Low Rate Credit Card||0% p.a. for 16 months with 2% balance transfer fee||A low interest rate card with a long-term balance transfer offer|
|St.George Vertigo Visa||0% p.a. for 14 months||A low annual fee credit card with a long-term balance transfer offer|
What is a balance transfer?
A balance transfer refers to the process where you transfer your existing credit card debt to a new credit card with a different bank that offers a lower interest rate for an introductory period. Generally, this promotional interest rate is 0% for a set period that can vary from 12 to 24 months.
Which type of balance transfer card is right for me?
Answers to the most common balance transfer questions and concerns
How do I apply for a balance transfer credit card?
You can request a balance transfer when applying for a new credit card online or in-store. Generally, there is a section of the application dedicated to conducting a balance transfer. You'll need to include the details of your existing credit card debt on the application, including where it's from and how much you're transferring, and ask to have the balance transferred to the new card. If you're successful, your debt is automatically moved over to your new account (that process typically takes a few days). You may have to pay a balance transfer fee and an annual fee for your new card. Please note that you'll be required to meet eligibility requirements to receive approval.
What is a balance transfer fee?
Some balance transfer cards, particularly those with longer promotional periods, charge a balance transfer fee. This is a one-time fee that's a percentage of the debt you transfer to the new card. Typically this is between 1% and 3%. For example, if you had a $20,000 debt, a 3% transfer fee would cost you $600.
How much money can I save with a balance transfer?
You can compare how much you'll save in interest with the different 0% balance transfer credit cards on the market with our comparison table on this page. Simply enter the amount of debt you're transferring and the current interest rate you're paying on your existing card and the calculator built into the table will show you how much you'll save over the promotional period in the "interest saved" column.
Exactly how much you'll save will depend on the size of your debt, the length of the 0% balance transfer offer and your repayments, but you could save hundreds or thousands of dollars in interest while you clear your debt.
Do I have to contact my old bank and new bank to make the switch?
Your new card issuer can automatically handle transferring your balance. You just need to provide details of your existing card when you apply. If you want to close your old card, you'll need to do that yourself by contacting your bank. If you don't close your old account, you'll be stuck with annual fees and any other maintenance costs that come with your existing account.
What's in it for my new credit card issuer?
Credit card issuers make money when you pay interest, so why would they charge 0% when they could charge 20% or more?
- You'll eventually revert to a higher rate. If you don't pay off your entire debt at the 0% rate, you'll end up collecting interest at the standard rate for your card. This is usually the purchase rate or cash advance rate, which can range between 9% and 22%. Once that happens, your new credit card issuer can potentially make hundreds or even thousands of dollars from you in interest charges.
- Persuading you to switch is tough. Australians are reluctant to switch banks, and it's expensive to acquire a new customer. Offering a discounted interest rate is one of the cheapest ways for banks to attract potential customers. It's essentially a cheap form of marketing.
Can I do a balance transfer with my existing credit card issuer?
No, you can't perform a balance transfer while staying with the same institution. You also can't perform a balance transfer to other banks within the same group or owned by the same organisation. For instance, you can't transfer from St.George to BankSA and Bank of Melbourne as they're owned by Westpac, or from Commonwealth Bank to Bankwest because they're both under CommBank. Check our complete list of which credit card issuers won't allow transfers between each other to discover which issuers will accept your balance transfer.
Are there any hidden catches involved in a balance transfer?
The promotional rate for your balance transfer is locked in, so you won't have to pay higher interest rates during the offer. When the promotional offer ends, a higher revert rate will apply to any remaining debts.
Even if the card offers a 0% balance transfer rate, you will still have to make the minimum payment each month. If you only make the minimum repayment, you likely won't clear the entire debt before the promotion ends. Once it finishes, any remaining debts will start collecting interest and your balance will continue to grow.
Hundreds of thousands of Australians arrange balance transfers each year, and the process is safe. However, our guide to avoiding common mistakes with balance transfers will help you use your new card effectively.
Can I take advantage of interest-free days on a balance transfer credit card?
Most credit cards offer a set period of interest-free days as a standard feature of the card. However, you can only take advantage of interest-free days when you've paid your balance in full. So, if you're still repaying your balance transfer, you won't be able to save with the interest-free days that usually apply to purchases.
Can I request a balance transfer after submitting my application?
Yes, it is possible to transfer a balance after you've applied for the card. However, the exact terms and conditions of doing this vary between the banks. It's best to contact your bank directly to discuss your options, but you can compare some of the banks processes below:
- Citi. You can apply for a balance transfer within up to 3 months after approval and will still be able to take advantage of the promotional offer.
- NAB. NAB allows cardholders to apply for a special introductory rate for a limited time. The balance transfer promotion is only available when you complete the balance transfer at the time of the credit card application.
- Virgin. You can apply for a balance transfer offer within 30 days of card approval.
- Bankwest. You can apply for the balance transfer offer, but the length of the offer will be impacted by the date you apply for it. So, let's say the card offers 0% for 18 months. If you apply for the balance transfer 3 months after card approval, you'll only be able to take advantage of the offer for 15 months.
- ANZ. ANZ will not offer the promotional 0% balance transfer offer once you've applied. Instead, you'll be given the balance transfer offer that is offered to existing cardholders, which usually involves less competitive interest rates and offers fewer savings.
Can I get a balance transfer for a personal loan or store card?
While most balance transfer deals are for credit card debt, some credit card issuers will let you transfer debt from a personal loan or store card as well. We've rounded up the banks that offer personal loan balance transfers.Back to top
How to do a balance transfer in five steps
Follow these five steps to successfully apply for a balance transfer credit card and improve your chances of approval:
- Find a balance transfer offer that meets your needs. Use our comparison tables to easily compare a range of cards and see how much you could save.
- Check how much you're eligible to transfer. The amount you can transfer to your new account usually varies between 80% and 100% of your approved credit limit. So, if you can only transfer 80% of your $10,000 credit limit, you'll only be able to transfer up to $8,000. Contact your existing bank to get an accurate payout figure for the account. It's important to note that the final payout figure might not be the balance that currently appears in your account. Interest payments, annual fees and direct debits could impact this final balance, so it's best to contact your issuer to get an estimate of what the final payout figure will be before you apply for your new card. You'll also need to make sure that you've selected a new card that accepts transfers from your current bank and card.
- Submit your application. If you've found a balance transfer credit card that is right for you, you can click on the 'Go to site' button to be directed to a secure online application. Check out our guidelines for successfully applying to maximise your chances of approval.
- Wait for your application to be approved. Some banks can process your request and offer approval within 60 seconds of applying, but others can take between 5-7 days. If you haven't heard from the bank after this time, you may contact them to find out if there's an issue.
- Confirm transfer and close your old account. Once your new card is set up, contact your old bank and make sure the previous account is closed to avoid any further fees or interest payments. Now it's time to start repaying your debt. Use our tips for paying off your credit card debts faster to clear your debt and maximise your interest savings.
What you need to know to compare balance transfer offers
There are lots of balance transfer card deals available in Australia, so how can you pick the right one? These are the crucial features you must compare when looking for maximum savings. We include all these features when calculating your total interest saved:
- Balance transfer interest rate. This is the interest rate that will be charged on the balance transferred to your new card. Most 2017 balance transfers offer 0% interest rates for a promotional period, but some may be higher. This is often referred to as the "promotional rate" or "introductory offer".
- Promotional period. The promotional period refers to how long the low-interest rate applies. Depending on the card, this can usually range between 12 to 24 months. Once the promotional period expires, you'll pay a much higher rate (the "revert rate"). The longer the promotional period, the more time you have to clear your debt.
- Revert rate. After the promotional period ends, the remaining debt will be charged interest at the higher "revert rate". Typically, this is the standard cash advance or purchase rate and ranges from 12% to 20%. If you don't think you can repay your entire debt before the promotional period ends, you should look for a card with a lower revert rate to minimise your interest costs.
- Balance transfer fee. This is a one-time fee, charged as a fixed percentage of the debt you transfer to your new card. Typically, this ranges from 1% to 3%. Balance transfer fees are often charged for balance transfer deals with longer promotional periods. Try and avoid them if possible or at least make sure that they don't outweigh the interest savings you'll make from the 0% balance transfer offer.
- Annual fee. Most balance transfer offers charge an annual fee in advance, typically around $100. Some credit card issuers waive this for the first year. The annual fee is treated as a purchase and incurs the same interest rate as other purchases you make with the card. If there's a promotional 0% purchase offer in place, your annual fee won’t accrue any interest until the promotion ends. To get maximum value from your card, make sure that the interest savings you make from the 0% balance transfer offer outweigh the annual fee.
These card features are less important, but potentially worth factoring into your comparison:
- Purchase rate: This interest applies to any new purchases made on the card. While this is usually 12% or more, some credit card issuers offer a promotional 0% rate on purchases as well. You can check out a full list of cards with that feature here.
- Other benefits: Cards may offer additional benefits such as the ability to earn reward points or free insurance for travel booked on the card. These could be tie-breakers when comparing two similar cards, but shouldn't form the basis for your decision when comparing balance transfers.
Why might my application be refused?
Financial institutions assess balance transfer applications carefully. To increase your chances of approval, see some of the factors that could cause a bank to decline your application before you apply:
- Poor credit history. You'll need a good credit history to obtain a balance transfer deal. If haven't checked your credit history in a while, you can order a free copy of your credit score here. However, if you have a poor credit history due to missed payments, defaults on your account or significant levels of debt, you might need to repay more of your debt and demonstrate your ability to make regular repayments before you apply.
- Applying too rapidly. Each application you make for a balance transfer deal is recorded in your credit history. If your application is refused, don't just apply to a different credit card issuer straight away. Instead, take some time to repay your debt and carefully compare other card options and ensure that you tick off the eligibility criteria before you apply. Follow the steps in our guide to what to do if your application has been refused to increase your chances of approval with the next application.
- Transferring to the wrong bank. If you try and get a balance transfer deal from a bank with the same owner as your current card, you'll be immediately refused. You can't transfer your debt from a Bank of Melbourne or BankSA card to a St.George card, for instance, as they're all owned by the Westpac group. Check out our full list of which banks you can transfer between before you apply.
- Cards in a different name. Your new balance transfer card must be in the same name as your current card. If you apply with a different name, such as your partner's name, you'll be turned down. If you need a card with multiple account holders, follow the steps in our guide to getting joint accounts.
To maximise your chances, follow our step-by-step guide to successfully applying for a balance transfer.
Mistakes to avoid with balance transfers
Used intelligently, a 0% balance transfer card will reduce your interest payments and get you out of credit card debt faster. Used the wrong way, your debts can actually become larger. Ensure you don't get trapped in balance transfer debt by avoiding these mistakes.
MISTAKE: Forgetting you still have to make payments
Despite the promotional period with interest at 0%, you still have a debt, and you still have to make at least the minimum payment each month. You can't simply balance transfer and then stop making payments. The minimum repayment is usually stated as "3% of outstanding balance or $20, whichever is greater".
MISTAKE: Not checking the revert rate
Once your balance transfer promotion finishes, you'll be paying the revert rate on any remaining balance. Choose a card with a revert rate that's lower than your current credit card rate if possible or make sure you repay the entire debt before the revert rate applies.
MISTAKE: Not making more than the minimum repayment
If you're only paying the minimum repayment each month, you won't be able to repay the entire balance by the time the 0% balance transfer offer ends. Then your debt will start to collect interest and it will grow again. Instead, you should calculate exactly how much you need to pay each month to repay the entire balance by the time the interest-free period ends. You can do this by dividing the size of your debt by the number of months in the balance transfer offer. This will give you a goal repayment to meet every statement period to clear the debt before the 0% promotion ends.
So how much should you pay each month? The table below shows what percentage you should pay off each month to fully clear your debt during the interest-free balance transfer period. We've also shown how much this would be for a $10,000 debt. For this example, we're assuming no new purchases are being made with the card.
|Duration||% of total to repay each month to clear debt||What that would equal per month on a $10,000 debt|
The key lesson? Budget as much as you can towards paying off your credit card debt while the promotional rate applies. If you haven't paid everything off, it's possible to apply for another balance transfer.
MISTAKE: Putting new purchases on your card
Adding new debt will slow down your ability to repay your card. Don't buy anything new on your credit card that you can't immediately pay off in full. Also, banks are required to allocate repayments to whichever debt is accruing the highest interest on your account. So, if your balance accrues 0% interest and your purchase collect the standard interest rate, your repayments will go to the purchases rather than your balance transfer. Even if your card has a 0% rate on new purchases, you should concentrate on repaying your debt rather than making more purchases.
MISTAKE: Not considering all applicable fees
While you won't be charged interest with a 0% balance transfer, you may have to pay annual fees and a balance transfer fee. Make sure you consider these when choosing a balance transfer deal. Don't dismiss cards purely on the basis of fees. Use our calculator, which compares the total costs for cards, to find the right deal for you.
MISTAKE: Keeping your old card open
It's tempting to hang on to your old card "for use in emergencies". Realistically, if you've run up debt on it before, you're likely to do so again. Cancel the card and concentrate on paying off your balance. Remember to transfer any regular payments. Ask your old bank for the final payout figure so you don't have any leftover debt.
Answers to the most frequently asked questions about balance transfers
Applying for balance transfers
- Q: Can I transfer my balance to my partner/spouse?
A: Yes. Providing that both you and your partner/spouse are already using a joint-account credit card. Read our full guide and find out which banks will allow this type of balance transfer. However, you usually can't transfer a debt that is in someone else's name to a new account that is under your name.
- Q: Which banks can I balance transfer to?
A: The key rule that decides whether you can balance transfer to a bank is whether or not your existing bank belongs to the same credit provider. For example, balance transfers are not allowed between St.George, Bank of Melbourne and BankSA since Westpac is the credit provider. Find out which banks won't accept your balance transfer.
- Q: Can I apply for another balance transfer offer with the same bank after my current promotion has ended?
A: No. Existing customers are ineligible to apply for balance transfer offers with their existing bank. However, if you balance transfer to a different bank, when this balance transfer promotion has ended you will be able to transfer to the first bank again.
- Q: Can I transfer a credit card balance from overseas to an Australian account?
A: No, you can only transfer balances from credit cards issued in Australia.
- Q: How long will it take for the old balance to appear in my new account?
A: While you could be approved for your credit card within 60 seconds, it can take between 1-2 weeks for your old balance to appear in the new account. Please note that the 0% balance transfer offer applies as soon as your card is approved rather than when your balance is in your account.
Using balance transfers
- Q: Can I make purchases interest-free whilst repaying my balance transfer?
A: Unfortunately, you can't take advantage of the standard interest-free days feature when you have an outstanding balance. However, some cards do offer promotional 0% offers on both purchases and balance transfers. You can compare credit cards with interest-free purchases and 0% balance transfers here.
- Q: How often should I make repayments and how much should they be?
A: You should make repayments by the due date detailed on your bank statement each statement period. While you're only required to pay the minimum repayment, you should always aim to pay more to clear your debt faster. This is especially important when you're using a 0% balance transfer offer that will only apply for a promotional period. To avoid paying interest on your debt, you should calculate how much you need to pay each month by dividing the size of your debt by the how the length in months of your promotional period. This will give you a goal repayment to make each month to repay your balance before the promotion ends.
- Q: Can I repay my card before the balance transfer period ends?
A: Yes, you can repay your balance as early as you'd like. In fact, it's wise to clear your debt as fast as possible to avoid the revert rates and any additional interest costs. Unlike a fixed schedule personal loan or home loan, there are no penalties for clearing your credit card debt ahead of time.
- Q: Which transactions do my repayments go towards first, purchases, cash advances or my balance transfer?
A: Banks will allocate your repayments to the highest rate of interest first. This means that with a low interest rate balance transfer promotion, repayments will usually go towards purchases and cash advances first. As a result, it is ideal not to make other transactions when repaying a balance transfer to ensure that all of your repayments are dedicated to clearing your debt.