Balance Transfer Credit Cards

What is a balance transfer credit card?

A balance transfer credit card offers you a low or 0% interest rate for an introductory period when you move your existing debt to the new credit card account. This introductory period gives you breathing room from interest charges and can allow you to pay off your debts faster (and for less interest). You can also use it for debt consolidation.

According to Finder data, 11% of Australians took out their last credit card in order to do a balance transfer and pay off debt.¹

How does a credit card balance transfer work?

Most balance transfer credit cards let you move debt from existing credit cards or store cards. A few cards also accept debt from personal loans.

The actual balance transfer process is simple: When you apply for a balance transfer credit card, you need to include details of the existing account and the amount of money you want transferred. If your application and balance transfer are approved, then your new credit card provider will move the balance to your new account.

After the balance is transferred, you can pay it off without having to pay interest (or with a very low rate of interest) for a set period of time. At the end of the introductory period, any remaining debt from your balance transfer will attract a higher, ongoing interest rate.

You can watch the video below to find out what a balance transfer is and how they work.

What is the best balance transfer credit card?

There are lots of balance transfer credit card deals available in Australia and there isn't one that is the "best", but some will offer you better savings than others. These tips will help you find a balance transfer card that suits you best:

• Look for a long offer. The longer the offer term, the more time you'll have to pay off your debt for a low or 0% rate. Make sure the first thing you do is compare credit cards.
• Watch out for the transfer fee. Cards that charge a balance transfer fee can affect your potential savings by adding an upfront cost worth between 1% to 3% of the amount you transfer.
• Find a low rate. Most balance transfer credit cards in Australia offer 0% interest for the promotional period. Typically, the lower the rate, the more you'll save.
• Note the revert rate. If you haven't paid off the balance transfer by the end of the offer period, the higher revert interest rate will be charged on your leftover debt.
• Check the eligibility. You can usually transfer a balance from Australian-issued cards or accounts, as long as they are from a different issuer. Some cards also allow you to transfer debts from personal loans and lines of credit held with other Australian financial institutions. See our guide to the banks you can and can't transfer between for more information.
• Know your limits. On some cards you can only transfer up to a percentage of your approved credit limit (usually 70% - 100%). If you apply to transfer more than your limit, the remaining amount will stay in your old account(s) and collect interest. You can see Finder's guide to balance transfer limits for more information.

How much can I save with a balance transfer credit card?

The amount you'll save with a balance transfer credit card depends on how much you owe, your current interest rate, the balance transfer offer and your monthly repayments (among other things). To put it in perspective, let's take a look at an example.

Example: A 0% balance transfer card vs paying off your current card

To help you figure out whether a balance transfer card could save you money (and time), we've compared a common balance transfer offer with monthly repayments on a standard credit card. The current balance and interest rates are based on Australian credit card statistics and data in 2022. We assume that the annual fee on both cards is the same and no new purchases are being made.

In this example, a credit card balance transfer would save you $356.36 in interest and you'd pay off your debt 1.49 months faster compared to the credit card with an average standard interest rate of 19.94% (based on RBA data).

These savings are based on making the same repayments for either card and paying a one-off balance transfer fee (which would cost $42.93 and be paid separately in this example).

What is a balance transfer fee?

A balance transfer fee is a one-time charge that may apply when you move your debt to a new card. It's typically worth 1-3% of the balance transfer amount, but not all offers include a balance transfer fee.

To give you an idea of the cost, transferring $5,000 onto a card with a 2.5% balance transfer fee would add $125 to the balance.

How to do a balance transfer in 4 steps

1. Compare balance transfer offers
Use the table above to compare offers and see how much you could save.

2. Apply for a new card
Read the requirements, gather your documents and request the balance transfer during the application.

3. Activate your new card
When you receive the card, activate it by phone or Internet banking (and start making repayments).

4. Close your old account
You are not required to close your old account, but it's usually a good idea to help you stay out of debt.

Quick tips for making the most of your balance transfer

1. Make sure you can transfer enough of your balance. It doesn't have to be 100%, but if you have to split your balance, make sure you can manage both cards.
2. Pay off the full balance before the end of the promotional period (auto-payments can help). This way you will avoid the higher revert interest rate.
3. Don't spend on the new card. This way your repayments go towards your balance transfer and you won't add to your debt.

Pros and cons of balance transfer credit cards

How long does a balance transfer take?

The balance transfer process typically takes between 5 and 14 days from when you activate the new card, although it does depend on the credit card provider.

Once you've been approved for your credit card and balance transfer, you can contact the provider to find out exactly how long they think it will take to process your balance transfer.

If you want to know how long a balance transfer can take with a particular bank or credit card brand, we've also summarised how Australian card issuers manage balance transfers and the processing times you can expect in a table.

• Table: Balance transfer times for different credit card providers

  Search by provider

  Institution	Number of days to process	Balance transfer notes and guides
  American Express	Normally within 10 business days	Once approved, American Express balance transfers are normally completed within 10 working days. During this time, you'll need to continue making any payments that are due on your existing accounts.
  Bank of Melbourne	Up to 14 days	If you apply for a Bank of Melbourne card and are approved, it can take up to a week for your balance transfer to go through. Once it's complete, it's your responsibility to contact your old bank to close your account. If you don't, then you'll continue to be charged any account maintenance fees (like annual fees) that come with your card.
  BankSA	Up to 14 days	If you apply as a new BankSA customer, the balance transfer request will only be processed after you have completed an identification check and activated the card.
  Bendigo Bank	Varies	Once your application is approved, Bendigo Bank staff will contact you to request the details needed for the balance transfer. Once they have them, the balance transfer will be processed. Depending on your existing provider's processes, it could take up to 48 hours for the balance to be moved once Bendigo Bank has paid out your old card.
  Citi	Up to 10 business days	Balance Transfers can take up to 10 business days to process. Within that period, you need to continue making payments until there is no outstanding balance on your existing accounts.
  Coles	Up to 10 days	As Coles credit cards are issued under the Citi brand, you won't be able to transfer balances from other Citi branded accounts. This includes cards from Citi, Suncorp Bank, IMB, Qantas Money and Virgin Money.
  CommBank	Generally up to 5 business days	The balance transfer processing time may vary depending how long it takes the other bank to organise it from their end.
  HSBC	Up to 7 business days	With HSBC, the balance transfer process is started once your application is approved. However, you should still allow around 7 working days for the balance to be added to your new account. During this time, you'll still need to make any payments that are due on your existing accounts.
  Macquarie Bank	Up to 5 days	Note that balance transfers are not allowed from any account issued by Macquarie Bank. This includes other Macquarie or Card Services accounts.
  NAB	5 to 10 business days	NAB will begin the balance transfer process around five days after your card is approved, even if you have not yet used the card. When this happens and the balance transfer is processed, NAB will consider it as your agreement to the card's terms and conditions.
  Virgin	Up to 10 business days	Most Virgin Money balance transfers are processed within 10 working days from when you activate your card, although you should allow more time if Virgin Money sends a cheque to your old provider. So make sure you check the balance of your old and new accounts to see when the transfer is completed – and remember to make any required payments during this time.
  Westpac	Up to 10 days	With Westpac, you typically request the balance transfer during the application process. Once you activate the card, any approved balance transfers will occur.

0% balance transfer and 0% purchase rate credit card offers

A 0% balance transfer and 0% purchase rate credit card allows you to save on both existing and future interest costs. You can move over balances you already owe and pay 0% interest, as well as make new purchases and not have to pay interest for an introductory period.

Higher interest rates apply to any existing debt after the promotional period ends, so it's important to pay off both of the balances in full to avoid interest.

Frequently asked questions

Balance transfer credit cards can help you save on interest costs and get your debt under control. As there are so many different balance transfer cards on the market, there is no one best option that works for everyone. Instead, look at the size of your debt, what you can afford to pay each month and the card’s features to find a balance transfer card that works for you.

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