Whether it's a new year's resolution or mid-year crisis, it's never too late to consolidate your debt. Kickstart your financial goal and repay your debt within 3 weeks and 5 easy steps.
When was the last time you made a new year’s resolution to control your finances and actually kept it? Maybe you didn’t know where to start, couldn’t find the right options for you or didn’t know which strategy to take. Don’t make the same mistakes this year. Whether it's January first or the beginning of July, it's never too late to fulfill your resolution.
Keep your promise and kickstart your debt consolidation goal with a balance transfer credit card within three weeks with our easy step-by-step guide.
Step 1: Collect the information you’ll need. What about expenses?
Week 1. While we don’t expect you and your pounding hangover to bound out of bed on New Year’s Day, you can start collecting the paperwork you might need over the first few days of the new year. We're going to start by collecting the information and documents you need to calculate your expenses. It may seem a little tedious at first, just know this exercise is going to be a crucial step to understanding (and maybe even start questioning) where your money is going. Don't underestimate the power of itemising your expenses, it's a powerful tool you can use to keep your finance records clean, cash flow steady and in the right direction - whether it's to deal with debt or for a strategy for your savings.
Start by collecting these:
- Outstanding bills and expenses: phone, utility, memberships etc.
- Your bank statements (paper or online), if you have access to your online net bank account you should be able to access any current direct debit set up and your spending habits.
- Any other important financial notices that you might not have access to online.
Next, let's exercise our bookkeeping skills.
- Start noting down your expenses. Simply begin by listing them, you can draw this out on paper or start a new spreadsheet-which is what we like to do.
- From your expenses, itemise your list including the monthly cost, calculating the total amount to give you your ballpark figure for how much you should be budgeting for expenses each month - this figure is the number you want to have a firm grasp of.
- Now add your income into the equation, if expenses exceeds the cashflow coming in you may need to re-evaluate. You might want to consider the expendable costs you're currently engaged in, think about the costs/luxuries you can do without (at least maybe just for the time you'll be executing your new savings strategy).
- By now you should have a good idea of where you sit financially, however you see it the turning point starts here - in any event you're already in a better position to start making your decisions to paying down your debt or starting a new savings plan.
Back to top
Step 2: Check your credit score (optional, but useful to consider)
Week 1. Once you know how much you owe and how much to budget, you can start considering which debt consolidation solution offers you the most value. Before you make a decision, you’ll need to consider which options you’re eligible to apply for. Most debt consolidation alternatives require cardholders to have a good credit history. If you don’t already have a copy of your credit file, it’s easy to order a copy to find out whether you’re eligible to apply. Credit files can take weeks to arrive by mail, but you can receive an online copy within a day if you apply through Equifax.
If you receive your credit file and find that your score isn’t up to scratch, you might want to reroute your resolution to improving your credit score before you apply for a new credit card. Keep in mind that rejected credit card applications can have a negative impact on your credit score, so rushing the process and applying for a card when your credit score isn’t in good shape could backfire.
If you have a good credit score, proceed to the next step.Back to top
Step 3: Compare, compare, compare
Week 2. You can’t achieve your resolution without the right tools. This is where comparing your credit card options is essential. When comparing balance transfer credit cards, there are a few key questions you should ask yourself to determine whether the card is right for you.
- When does the promotional offer end? If your card comes with a 0% offer, it’s likely that it will only last for 6 to 24 months. While you’re comparing, devise a quick budget and calculate whether you could repay your entire balance by the end of this period - a common trap you want to avoid is only paying the minimum repayment. If not, you’ll want to consider a card with a longer promotional period to ensure that you’re not carrying a remaining debt (plus interest) beyond 2017.
- How much can I transfer? Most cards only accept balance transfers up to a fixed amount (or a percentage of your total debt) If your balance exceeds this amount, then you’ll be unable to transfer the entire amount and will have to continue repaying the remaining balance under high interest rates in your old account, you can alternatively look into high credit limit balance transfer cards.
- Who can I transfer from? Most providers won’t let cardholders transfer balances from an existing account with the same bank. You might also find that you’re unable to transfer debts from partnered, affiliated or co-owned banks. Confirm which banks you can transfer between here.
- Other fees and features. Make sure to compare other features of the card outside of balance transfers. Details such as the annual fee, interest rates on purchases and rewards programs could also impact how you use the card during and after the balance transfer is in place, so these should also be part of your comparison process.
- Eligibility requirements. You’ll need to meet the provider’s eligibility criteria if you wish receive approval for the card. Make sure you earn the minimum income requirement, have a good credit history and meet any other conditions before applying.
Balance Transfer Credit Cards Comparison
Rates last updated July 22nd, 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
Step 4: Apply wisely
Week 2. Once you’ve compared your credit card options and decided on one, it’s time to apply for your card. Click on the green "Go to site" button on the product table or review page to be directed to a secure online application with your preferred bank.
Most online applications will take approximately 10 to 15 minutes to complete and submit. To make sure the application process goes smoothly, ensure that you meet the eligibility requirements and have all of the required documentation on hand before beginning the application.
If you apply online, many providers can you give a response within 60 seconds or so based on the information you have provided. If you’re approved, you’ll receive confirmation and information packages regarding the card and your account. If there has been a problem or the provider needs to cross-check some information you’ve provided, your application status may be left pending. If you haven’t received any feedback for a few days, contact the provider directly to discuss the status of your application.
Pro-tip for balance transfers
If the card has a promotional balance transfer offer, it’s best to apply for the balance transfer while you’re filling out the rest of the application so you can request that your debt is transferred to your new account as soon as possible. By doing so, this will allow you take advantage of the full length of the promotional offer. Make sure you have the details of your transfer, including how much you need to transfer and where from, before beginning the application. If you’ve decided to close your old account, you’ll also need to contact your old bank to organise this.
Otherwise, if you haven’t met the eligibility requirements or have failed to provide the necessary documents, you’ll receive a notification that your application has been rejected. If your application has been denied, don’t apply for another straight away. Take the time to understand why your application was rejected, compare your options and wait a few weeks before applying again. Remember that multiple rejected applications will have a negative impact on your application, so you’ll want to avoid applying for more than one card in a short time frame.Back to top
Step 5: Start consolidating
Week 3. If your application has been approved, you can expect to receive your card within one to two weeks. If you applied for the balance transfer at the time of application, your balance should’ve transferred to your new account.
If you haven’t already, spend the wait in between approval and receiving your card mapping out a realistic budget and set of goals that’ll help you keep your repayments on track.
Use these 3 simple rules to keep yourself moving forward:
- Set monthly goals.
- Use calendar notifications to remind you when payments are due.
- Set a final date for when you’d like to have your debt repaid by the end of the year (and preferably before the promotional period finishes).
New Year’s resolutions are notoriously hard to keep, but it's never too late to set your goal. Once the new year settles in, it’s easy to lose sight of your goal and become distracted by your everyday responsibilities. The hardest part is planning how you’ll achieve the goal, but this guide should make that a whole lot easier.
All that’s left to do now is put on your game face, apply for a new card and start consolidating.