Paying Off An Overseas Credit Card
What's the cheapest option for paying off debt on an overseas credit card?
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A user wrote in with this question:
I have recently moved to Australia from New Zealand. I still have a credit card in New Zealand and am now finding it expensive to pay it off from Australia. I am having trouble finding a company that allows balance transfers from other countries, would you know if this is even possible? And if so, could you please let me know where I can start looking.
Thank you for your time.
Is it possible to pay an overseas debt with a balance transfer?
This is a question that's been asked more and more recently: how does a person moving country a) bring their debt with them when they move and b) consolidate that debt into one low interest rate like with a balance transfer?
A balance transfer is one of the most popular options for Australians looking to get ahead with their credit cards, but the rules around accepted balance transfers can be restrictive.
- The balance must come from an Australian credit card or store card.
- The balance must not come from a credit card related to the institution you're transferring to.
- You can only transfer up to approximately 95% of your approved credit limit on your new card.
A balance transfer from a New Zealand (NZ) credit card to an Australian credit card is out of the question and consolidating the debt through a personal loan with lenders is also not an option. Much like credit card providers offering low interest balance transfer promotions, these institutions will not 'buy' overseas debt and 'resell' it to a customer at a low rate of interest.
To answer Michelle's question, an option for her is to balance transfer from her existing NZ credit card to a new NZ credit card taking advantage of a balance transfer promotion - they do exist in the NZ credit card market. This works much the same way had she performed a balance transfer to an Australian credit card. She would transfer the debt, receive a low rate of interest for a set period of time and use the low interest period to pay off as much of the outstanding balance as possible - she would do this from Australia, converting Aussie dollars to NZ dollars to pay off her card. This is the only way to pay her card from Australia, but international money transfers can be fraught with fees and charges.
Paying a credit card from another country
Because Michelle is set up with a NZ account, she should be able to easily access her NZ Bank's online banking facility from Australia. There are a couple of ways she can send money from Australia to her New Zealand account, the two most common are via International Money Order or via an Australian banking institution. We will make an assumption that Michelle isn't going to be able to pay her card off in one go and subsequently will be looking to go for the cheapest option.
International money transfer
An international money transfer is the process of sending money from one country to another. These services specialise in foreign exchange services. Generally, you open an account with the service and deposit the money you want to send via your local bank account so you're not charged any fees. Then, you indicate what country you want to send the funds to by providing the recipient's IBAN/SWIFT number, BSB and account number. The service then processes the transaction for you, which is usually at a better exchange rate and with lower fees due to economies of scale.
Compare international money transfer services
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Done through the bank
The potentially ideal way for Michelle to pay off her NZ credit card from Australia is to use her Australian bank account's online facility to pay her NZ credit card directly. It's better for her to use an online banking facility because it's less expensive than going in person to a bank branch to send the cash overseas.
Fees are as follows:
CBA: $22 / $30 if done over the counter.
ANZ: No fee via online banking.
NAB: $22 / $35 if done over the counter.
Westpac: $20 / $32 if done over the counter.
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