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

You've done your balance transfer, but what now? Here are some tips to help you make the most of it.

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Getting a balance transfer is simple but it can be challenging to pay off your debt before the introductory period runs out. So, if you've just got a new balance transfer credit card, here you'll find tips on how to make the most of the introductory 0% p.a. interest rate as you pay off your debt.

Close the old credit card account first

After the debt is moved from your old card to the new one, you will need to cancel the old account if you don't want to use it any more. As well as removing any temptation to use the card again, cancelling it will save you money if the card charges an annual fee.

To cancel the old card, call up the credit card provider and request the cancellation. You may also be able to cancel it online. Just remember to double-check there is no balance and make sure any direct debit payments have been transferred to a different account. You can learn more in this step-by-step guide on how to cancel a credit card in Australia.

Get a head start during the introductory period

Balance transfer introductory periods typically last for the first 6 to 24 months from when you get the new card. This is when you have the greatest chance of saving money on your debt, thanks to the low or 0% p.a. introductory interest rate. Some strategies you could use to make the most of this period include:

  • Pay off as much as you can each month. The more of your debt you can pay off in the introductory period, the less interest you'll be charged when the 0% p.a. interest rate reverts to a higher standard rate. Depending on the size of your debt, you could even clear it without paying any interest. If you're not sure what you can afford to pay, you can use our free budget planner to work it out.
  • Set up automatic payments. Most credit card companies allow you to set up a direct debit from an Australian bank account. This means you can "set and forget" repayments, so that they'll always be made on time and for an amount of money that you can choose and customise.
  • Make additional repayments. Remember that you can make more than one repayment a month when it's affordable. For example, if you get a bonus at work or a large tax refund, putting a bit of that money towards your debt will help you avoid high interest charges after the introductory period ends.

What will your balance transfer rate revert to?

Can I repay my credit card debt before the balance transfer period ends?

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.

How much will you have to repay?

Don't use your balance transfer credit card for purchases

  • Remember repayment allocation rules. Credit card repayments must go towards the part of your balance that is charged the highest interest rate first. So, if you use your card for purchases, your repayments will go towards paying off that balance before your balance transfer debt.
  • Don't assume you'll get interest-free days. While many cards offer interest-free days for new purchases, this feature is usually only available when you've paid off your account balance in full by the due date on your last statement. To put it another way, if you have a balance transfer debt, forget about enjoying interest-free days on purchases.
  • Have a plan for emergencies. If an unexpected expense comes up, think carefully about how you'll pay for it. Remember to consider other options, such as savings, or factor the added cost into your card repayments. If you do end up using your balance transfer card, check out our guide on managing new purchases when you have a balance transfer.

Weigh up your options at the end of the introductory period

If you've found yourself with unpaid debt at the end of the introductory period, you have several options:

  • Pay off the balance on the existing card. If you stick with the current card, the remaining balance transfer debt will be charged interest at a higher, ongoing rate – sometimes known as the revert rate. This will be much higher than the 0% p.a. introductory rate, so you'll need to think about how long it will take to pay off the rest of the debt and whether it is worth it. You can use a credit card repayment calculator to save time working this out.
  • Apply for another balance transfer. If you want to get a 0% p.a. interest rate for longer, you could look at applying for another balance transfer. But be aware that any applications will be subject to approval – and having several credit card applications in a short amount of time could hurt your credit score. As credit card providers don't usually accept balance transfers from the same issuer, you may also have fewer options when you want to get a second balance transfer. Learn more in this guide to getting a second balance transfer.
  • Consider a personal loan. Personal loans typically have lower interest rates than the revert rates for balance transfer credit cards. So if you still have a lot of debt and want to save on interest charges, another option is to look at consolidating the debt with a loan.

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.

Compare balance transfer credit card offers

Data indicated here is updated regularly
$
% p.a.
Name Product Balance transfer rate Purchase rate Annual fee Amount saved
Citi Rewards Card - Exclusive Offer
0% p.a. for 30 months
21.49% p.a.
$49 annual fee for the first year ($149 p.a. thereafter)
Finder Exclusive
Save on interest with 0% p.a. on balance transfers for 30 months with no balance transfer fee. Plus, a $49 first-year annual fee and Citi Rewards.
Coles No Annual Fee Mastercard - Exclusive Offer
0% p.a. for 12 months
0% for 12 months, reverts to 19.99% p.a.
$0
Finder Exclusive. Ends 29 October 2020
Save on new and existing interest charges with 0% interest on both balance transfers and purchases for the first 12 months.
ANZ Low Rate
0% p.a. for 25 months with 1.5% balance transfer fee
12.49% p.a.
$0 annual fee for the first year ($58 p.a. thereafter)
Save with 0% p.a on balance transfers for 25 months (with a 1.5% BT fee) and $0 first year annual fee. Plus a 12.49% p.a. purchase interest rate.
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
0% p.a. for 22 months
20.74% p.a.
$64 annual fee for the first year ($129 p.a. thereafter)
Get 0% p.a. for 22 months on balance transfers and a reduced first-year annual fee. Plus, earn up to 30,000 bonus Velocity Points.
HSBC Platinum Credit Card - Balance Transfer Offer
0% p.a. for 22 months
19.99% p.a.
$129
Enjoy a 22-month balance transfer offer, travel insurance and an annual fee refund when you spend an eligible $6k/year.
Westpac Low Rate Card
0% p.a. for 20 months with 1% balance transfer fee
13.74% p.a.
$59
A low rate card offering 0% p.a. interest on balance transfers for the first 20 months and a $200 cashback offer.
Citi Rewards Card - Flybuys Offer
0% p.a. for 15 months with 1% balance transfer fee
21.49% p.a.
$49 annual fee for the first year ($149 p.a. thereafter)
Receive 75,000 bonus Flybuys points and a $100 Kmart eGift Card when you meet the spend requirement. Plus, a reduced first-year annual fee.
Coles Rewards Mastercard - Exclusive Offer
0% p.a. for 18 months with 1.5% balance transfer fee
19.99% p.a.
$0 annual fee for the first year ($99 p.a. thereafter)
Finder Exclusive. Ends 29 October 2020
Save with $100 off a Coles Supermarket shop and a $0 first-year annual fee. Plus, 0% p.a. on balance transfers for 18 months (1.5% fee applies).
NAB Low Rate Credit Card
0% p.a. for 20 months with 2% balance transfer fee
12.99% p.a.
$59
Get a 0% p.a. interest rate for 20 months on balance transfers, Visa Offers + Perks and a competitive $59 ongoing annual fee.
Citi Clear Card
0.9% p.a. for 15 months
0.9% for 15 months, reverts to 14.99% p.a.
$99
Save with 0.9% p.a. for 15 months on purchases and balance transfers. Plus, complimentary purchase insurance cover.
Qantas Premier Platinum
0% p.a. for 18 months with 1% balance transfer fee
19.99% p.a.
$199 annual fee for the first year ($299 p.a. thereafter)
Get 100,000 bonus Qantas Points, 75 bonus Status Credits and a 0% p.a. balance transfer rate for 18 months (with a one-time 1% BT fee).
St.George Vertigo Classic
0% p.a. for 22 months with 1.5% balance transfer fee
0% for 7 months, reverts to 13.99% p.a.
$0 annual fee for the first year ($55 p.a. thereafter)
Get 0% p.a. promotional purchase and balance transfer rates and save with a first-year annual fee waiver.
HSBC Platinum Qantas Credit Card
0% p.a. for 12 months
19.99% p.a.
$99
Receive 20,000 bonus Qantas Points and a long-term balance transfer offer. Plus, complimentary travel insurance.
Bank of Melbourne Vertigo Classic
0% p.a. for 22 months with 1.5% balance transfer fee
0% for 7 months, reverts to 13.99% p.a.
$0 annual fee for the first year ($55 p.a. thereafter)
Save with 0% p.a. for 7 months on purchases, 0% p.a. interest for 22 months on balance transfers and a $0 first-year annual fee.
BankSA Vertigo
0% p.a. for 22 months with 1.5% balance transfer fee
0% for 7 months, reverts to 13.99% p.a.
$0 annual fee for the first year ($55 p.a. thereafter)
Enjoy a 0% p.a. for up to 22 months on balance transfers and up to 7 months on purchases. Plus, $0 first-year annual fee.
St.George Vertigo Classic Rainbow
0% p.a. for 22 months with 1.5% balance transfer fee
0% for 7 months, reverts to 13.99% p.a.
$0 annual fee for the first year ($55 p.a. thereafter)
All the great low cost features of the Vertigo Visa with a rainbow design in support of the LGBT community.
St.George Amplify Platinum
0% p.a. for 22 months with 1.5% balance transfer fee
0% for 7 months, reverts to 19.74% p.a.
$0 annual fee for the first year ($99 p.a. thereafter)
Save with 0% p.a. interest rates on purchases and balance transfers. Plus a $0 first-year annual fee.
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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

    • Avatarfinder Customer Care
      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

Credit Cards Comparison

Data indicated here is updated regularly
Name Product Purchase rate Balance transfer rate Annual fee
Citi Rewards Card - Exclusive Offer
21.49% p.a.
0% p.a. for 30 months
$49 annual fee for the first year ($149 p.a. thereafter)
Finder Exclusive
Save on interest with 0% p.a. on balance transfers for 30 months with no balance transfer fee. Plus, a $49 first-year annual fee and Citi Rewards.
Coles No Annual Fee Mastercard - Exclusive Offer
0% for 12 months, reverts to 19.99% p.a.
0% p.a. for 12 months
$0
Finder Exclusive. Ends 29 October 2020
Save on new and existing interest charges with 0% interest on both balance transfers and purchases for the first 12 months.
Qantas American Express Premium Card
20.74% p.a.
$249
Enjoy 100,000 bonus Qantas Points, 50 bonus Status Credits and 2 complimentary Qantas Club lounge invitations per year. Ends 4 November 2020.
Citi Rewards Card - $500 Voucher Offer
21.49% p.a.
0% p.a. for 12 months
$99 annual fee for the first year ($199 p.a. thereafter)
Get a $500 e-voucher to spend at Myer, JB Hi-Fi or Coles when you spend $3,000 in the first 90 days. Plus, earn points with the Citi Rewards Program.
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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.

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