How to manage a new credit card after you have done a balance transfer

You've conducted your balance transfer, but what now? Here are some tips on how you can manage your new credit card and consolidate your debt

Balance transfer credit cards can be an efficient way to free yourself from high interest to start consolidating your debt. Conducting a balance transfer is a simple process, but repaying your debt before the promotional offer runs out can be the tricky part. If you've just conducted a balance transfer, here are a few tips to follow to ensure that your consolidation goes successfully and smoothly.

Pay attention to the details of the promotional offer

There are a few key details of the offer that you should pay attention to after you've conducted your balance transfer:

  • Offer length. Balance transfer offers generally sit between 6 and 24 months. Once your card has been approved, the balance transfer promotional period begins. The sooner you begin repaying your balance, the longer you'll have to take advantage of the low interest offer. Set phone and calendar reminders to prompt you to make regular repayments and to flag how long you have left.
  • Promotional rate. Most Australian providers offer cardholders 0% balance transfer offers, but if it does charge a low interest rate, it's important to understand how much your balance will grow each month and how you'll need to factor this into your repayments. Creating a payment plan will help simplify the process and reduce your chances of failing to repay your entire debt by the end of the promotional period.
  • Revert rate. Like all good things, the low promotional rate on your balance transfer doesn't last forever. Once the promotional offer ends, the revert rate will kick in and start collecting interest on your remaining debt. The revert rate is generally the much-higher standard cash advance or interest rate. To avoid growing your debt with interest once the offer expires, make regular repayments, don't use your card for purchases and keep an eye on when the offer ends to ensure you don't have a remaining debt at that point.

What will your balance transfer rate revert to?

Make more than the minimum repayment

  • Minimum repayment. You may have a 0% interest rate, but you'll still need to make minimum repayments each month. How much you'll have to pay will vary from card to card, but this amount rarely allows cardholders to repay their entire debt by the time the promotional offer ends. If you want to avoid collecting high interest once the promotion expires, you should aim to pay more than the minimum amount each statement period.
  • Work with a budget. Consider the size of your debt, the length of the promotion and the interest rate to calculate how much you'll have to pay each month to ensure that your entire debt is repaid by the end of the offer. If not, your remaining balance will begin collecting the higher revert rate and you could get stuck in the debt trap once again.

How much will you have to repay?

Don't use your balance transfer credit card for purchases

  • Repayment hierarchy. The sole purpose of getting a balance transfer is to consolidate your debt. Using your balance transfer card for purchases completely contradicts your debt consolidation aim. Balance transfer credit cards often charge high interest on purchases and your repayments will automatically go to whichever debt is collecting the highest interest. So if you use your card for purchases, your payments will go towards your purchases and will restrict the value you could be getting from the promotional offer while it's still in place.
  • Interest-free days. Interest-free days are only active if you're not carrying a balance at the end of the statement period, so you won't be able to cut interest costs that way.
  • Emergency purchases. If you want a card for emergency purchases, you might want to consider applying for a different card with a low interest rate on purchases and do your best to keep the other card for consolidating only.

After the offer ends

If you've found yourself with a remaining debt at the end of your promotional period, you might want to consider doing a second balance transfer. However, if your credit history shows that you were unable to repay your debt during the promotional period, this may means lenders are less likely to approve your application. Applying for too many credit cards and rejected applications can have a negative impact on your credit file, so this is also something important to consider if you're considering using a second balance transfer as a back up.

Balance transfer credit cards can be a worthwhile consolidation tool, but only when used properly. Plan your strategy, make regular repayments and follow the above simple tips to ensure you get the most out of your balance transfer.

Comparison of Balance Transfer Credit Cards

Rates last updated July 24th, 2017.

Woolworths Everyday Platinum Credit Card

$100 eGift Card plus BT & annual fee offers have been extended until 30 September 2017.

July 1st, 2017

American Express Explorer® Credit Card

Bonus points offer changed from 50,000 to 100,000, which is valid until 2 October 2017.

July 4th, 2017

NAB Premium Card - Exclusive Offer

A new exclusive offer of 0% p.a. for 24 months on balance transfers which is valid until 31 August 2017

July 17th, 2017

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Balance transfer rate (p.a.) Purchase rate (p.a.) Annual fee Interest Saved
St.George Vertigo Visa
Receive up to 55 days interest-free on purchases and the ability to make contactless payments with Visa payWave technology.
0% p.a. for 14 months 13.24% p.a. $0 p.a. annual fee for the first year ($55 p.a. thereafter) Go to site More info
St.George Vertigo Platinum
Offers complimentary travel insurance, complimentary purchase insurance and access to a 24/7 personal concierge service.
0% p.a. for 20 months 12.74% p.a. $99 p.a. Go to site More info
Virgin Australia Velocity Flyer Card - Exclusive Offer
Apply by 31 July 2017 to earn bonus Velocity Points for the first three months and a $129 Virgin Australia Gift Voucher each year.
0% p.a. for 18 months 20.74% p.a. $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
Citi Rewards Platinum Credit Card
A long-term balance transfer offer with a range of platinum rewards and benefits.
0% p.a. for 24 months with 1.5% balance transfer fee 20.99% p.a. $49 p.a. annual fee for the first year ($149 p.a. thereafter) Go to site More info
ANZ Platinum Credit Card - Exclusive Offer
Receive a low introductory offer of 0% p.a. on purchases for 3 months and 0% p.a. on balance transfers for 12 months.
0% p.a. for 12 months 0% p.a. for 3 months (reverts to 19.74% p.a.) $0 p.a. annual fee for the first year ($87 p.a. thereafter) Go to site More info
HSBC Platinum Credit Card
Earn 1 Reward Point per $1 of eligible spend and receive complimentary travel and purchase protection insurances.
0% p.a. for 22 months with 2% balance transfer fee 19.99% p.a. $99 p.a. Go to site More info
Bank of Melbourne Vertigo Platinum
Get a range of complimentary insurance covers, access to a 24/7 concierge and up to 55 days interest-free on purchases.
0% p.a. for 20 months 12.74% p.a. $99 p.a. Go to site More info
BankSA Vertigo Visa
Get up to 55 days interest-free on purchases and be protected by 24/7 Falcon® Fraud service.
0% p.a. for 18 months 13.24% p.a. $0 p.a. annual fee for the first year ($55 p.a. thereafter) Go to site More info
NAB Low Fee Card
Receive complimentary purchase protection insurance, special offers from Visa Entertainment and up to 44 days interest-free on purchases.
0% p.a. for 16 months with 2% balance transfer fee 19.74% p.a. $30 p.a. Go to site More info
NAB Premium Card - Exclusive Offer
Exclusive to finder.com.au, enjoy a no fee, long-term balance transfer offer with platinum privileges.
0% p.a. for 24 months 19.74% p.a. $90 p.a. Go to site More info

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2 Responses

  1. Default Gravatar
    AidanSeptember 1, 2016

    Hi Finder,

    I’m looking at switching cards from the Commbank Platinum to AMEX Qantas Ultimate card to maximise our frequent flyer points on spend. The Qantas Ultimate has an 0% 12mths interest free balance transfer rate. I plan on using the new card for everyday expenses as to maximise points earnt. Can I do a balance transfer from Commbank to the new Qantas card and still place new purchases on the new card? Will this breach the 12 month interest free rate? Or will the balance transfer still incur no interest as long as I pay the new purchases balances off in it’s entirety every month plus the minimum repayment for the balance transfer?

    Thanks in advance
    Cheers
    Aidan

    • Staff
      MaySeptember 2, 2016Staff

      Hi Aidan,

      Thanks for your questions.

      Please find my answers below:

      1. Can I do a balance transfer from Commbank to the new Qantas card and still place new purchases on the new card?
      Yes, you can apply for the AMEX Qantas Ultimate Card and request for a balance transfer from CBA so long that you meet the eligibility criteria of the card. While on BT, you can still make purchases using this card.

      2. Will this breach the 12-month interest-free rate?
      No, the promo on 0% interest on balance transfer will not be affected when you make new purchases on the card.

      3. Or will the balance transfer still incur no interest as long as I pay the new purchases balances off in its entirety every month plus the minimum repayment for the balance transfer?
      Yes, the BT will still be at 0% interest for 12 months. Since AMEX Qantas Ultimate Card charges 20.74% p.a. on purchases, it’s best to pay your balance in full (plus BT repayments) every payment due date to avoid this interest.

      Cheers,
      May

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