Understand the rules that you need to follow to conduct a successful balance transfer
A balance transfer is a great way to pay off your existing credit card debt at a much lower rate, but these deals are restricted by many terms and conditions. We've compiled a list of the most frequently asked questions we get from users in hope that it will make your debt consolidation journey easier. Here are some of the key considerations when completing a balance transfer.
What should I consider when conducting a balance transfer?
- What is the maximum/minimum amount I can balance transfer?
- Credit limits and how much you want to balance transfer
- Which banks can't I do a balance transfer to?
- What is the revert rate of my balance transfer?
- Can I transfer to the same bank?
- Do interest free days apply?
- How long does a balance transfer take?
- Should I cancel my old credit card?
How much can you transfer?
Some banks will allow a minimum of $100, some $500. In terms of maximums, it depends on the institution. Some institutions don't put a maximum on how much you can transfer, though this can sometimes sit between 75%-100% of your approved credit limit. Confirm what the minimum and maximum transfer amounts are by checking your relevant product disclosure statement. Generally speaking you can transfer up to 90% of your approved credit limit.
Which banks can't I balance transfer to?
You generally can't transfer your debt from a balance with the same bank. So you can't transfer a balance from a St.George card to a new St.George card. There are also some other institutions that you can't transfer between. These are generally because the providers are owned by the same institution, as is the case with BankSA, St.George and Bank of Melbourne who are all owned by Westpac. Check who you can and can't transfer between using the link below.
What is the revert rate of my balance transfer?
Your low or 0% balance transfer rate will only last for the length of the promotional period, after which it will revert to either the much higher interest or cash advance rate. Usually the cash advance rate is higher, but you should check regardless because you could stand to collect around 20% in interest on your remaining balance. To confirm what your provider will revert the rate to, please click the link below.
Do interest free days apply?
No, the credit card that you just transferred your balance to will not have any interest free days until you've paid off the full balance. This means that you shouldn't really use it unless you're prepared to pay a higher interest rate. If your old credit card has a reasonable purchase rate, it might be worthwhile to use that one instead and pay it off as quickly as you can. However it's important to focus on paying the balance you've just transferred first.
How long does a balance transfer take?
This depends on the financial institutions involved. It usually takes about two weeks to complete, but as soon as the deal is approved by the bank your balance transfer period begins. When you've received your new credit card in the mail, assume that the balance transfer period has started a week beforehand. It's important to remember that your balance transfer period doesn't start from the date you receive the credit card. It's important to start repaying your debt as soon as possible, because the promotional period starts from the moment your balance transfer is completed, so you'll want to take advantage of the full offer if possible.
Do late payments affect the promotional balance transfer rate?
The promotional rate is effective for the entire period offered and is not usually affected by other rates on the credit card (e.g. late payments, cash advances etc). Check with your provider if you're unsure.
Should I cancel my old credit card?
Yes, especially if it has an annual fee and you're not intending to use it. If there still a balance on your old credit card pay it off as soon as possible and cancel the card to eliminate the chances of any other fees or charges. If you want to keep the card as a backup for purchases, make sure it has a low purchase rate and you can repay it in full each month to avoid building up debt again.