Guide to the balance transfer process
How to move your existing credit card debt to a new card with a 0% balance transfer.
If your credit card debt is collecting interest, a balance transfer might be the solution. You can get your credit card debt under control with a card that charges no interest for a promotional period. You can use this guide to discover the steps you need to take to request a balance transfer and some tips to paying off your debt before the introductory offer ends.
How to do a balance transfer in 4 steps
If you’re thinking of consolidating your debt by conducting a balance transfer, follow these four steps to understand how to compare your options, apply and pay down your debt with a 0% offer.
Step 1: Compare your options.
Since there are numerous 0% balance transfer offers on the market, it’s important that you research and compare them before deciding on the one that will best serve your needs. To make things easier, you can compare your options based on the following:
- Introductory interest rate. Most balance transfer credit cards come with a 0% balance transfer interest rate, but some may come with a low but higher rate of say 6%.
- Length of the introductory period. Balance transfer cards usually offer a low or 0% interest rate for a fixed time only. This introductory period normally last between 6 and 24 months. You should look for a card that will give you enough time to pay off your entire debt before the revert interest rate applies.
- Revert rate. When the introductory period ends, a revert interest rate will apply to your balance. This is usually a higher interest rate (such as the standard purchase and cash advance rate) and you should factor it into your calculations, especially in the event you are unable to repay your entire debt during the introductory period.
- Balance transfer limit. There is a limit to the amount you can transfer, and this varies among credit cards. You can only transfer up to a percentage of your approved credit limit, such as up to 70–100%.
- Eligible issuers and cards. Balance transfers are not usually permissible between credit cards issued by the same bank or card issuer. Check our list to learn which ones you can transfer your balance to.
- Balance transfer fee. Sometimes you will be charged a one-time balance transfer fee for the balance transfer, up to 3% of your transferred amount. As this can be a substantial fee depending on the size of your debt, you may wish to look for a card with no balance transfer fee.
- Other card features and fees. While you shouldn’t use a balance transfer card for purchases while you’re trying to pay down a debt, if you plan to use the card beyond the balance transfer offer, you should consider its typical features. These include the annual fee, purchase interest rate, cash advance interest rate, ATM fee, foreign transaction fee and other costs where applicable.
Step 2: Apply for a credit card and request a balance transfer.
Once you have chosen your new credit card, the next step is to apply. It can usually take around 10-15 minutes to complete a credit card application and, if you're successful, your card should arrive within two weeks. To help increase your chances of approval and quicken the application process, make sure to consider the eligibility requirements and prepare the necessary information before you apply for the card:
- Age. You must be at least 18 years of age to apply for a credit card in Australia.
- Income. Most cards have a minimum income requirement that begins at $15,000 yearly. Premium cards have much higher income requirements.
- Residential status. Most cards require that applicants be Australian citizens or permanent residents, but some cards also cater for certain visa holders.
- Credit history. All cards require that you have a good credit history and credit score.
- Balance transfer T&Cs. As well as the balance transfer limit, there may be restrictions around the type of debt you can transfer. For example, some cards don't accept transfers from joint accounts or a personal loan.
Important information and documents
- Proof of identification. You'll need to provide proof of identification, which usually includes a copy of your driver's licence, passport or Medicare card.
- Proof of income and employment. You may be asked for copies of recent payslips, income statements and relevant employment contracts.
- Proof of other assets. As well as relevant details of your assets, liabilities and expenses, you may also need to provide proof of any assets listed.
- Balance transfer details. The card application usually includes a section for requesting your balance transfer. Since this section is very important for your balance transfer request, be sure to provide accurate details of your current loan accounts and the amount(s) you would like transferred.
If you've met the eligibility requirements and completed the application properly, you can sometimes receive approval within 60 seconds.
Step 3: Close your old account.
Once you’ve received your new credit card and your balance transfer has been processed, it’s wise to close off your old account. Make sure that the balance has been successfully moved across by contacting your previous card provider, and then close your old account so that you don’t get hit with further maintenance or annual fees in the future. If you were unable to transfer your entire debt to the new card, you’ll need to pay off any remaining balances before you close the account. See our guide on how to cancel your credit card for tips on closing your card without hurting your credit score.
Step 4: Start paying off your debt.
Once your balance transfer is complete, you will have the length of your introductory period to pay down your balance. It is crucial that you make more than the minimum repayment each month to repay the entire debt before the revert rate applies. If necessary, seek free help for managing your debt.
A balance transfer can give you a leg up in climbing out of debt without the burden of high interest. It will buy you some interest-free time to repay your debt, and can save you money that would otherwise have been lost to interest fees. With some discipline and commitment, you can use a balance transfer credit to pay off your credit card faster and cheaper.
Video: How do balance transfers work?
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* The credit card offers compared on this page are chosen from a range of credit cards finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.