Balance transfers can be a useful debt consolidation strategy, but what happens when the promotional offer ends and the revert rate kicks in?
If you're carrying a debt that's collecting high interest, a balance transfer credit card with a promotional offer can be a great way to repay your debt without the cost of interest. But like all good things, the promotional offer can't last forever and a revert rate will eventually kick in. The revert rate refers to the standard balance transfer rate, which is usually the cash advance or purchase interest rate, that you'll have to pay on your remaining balance once the introductory offer ends.
When will I have to pay the revert rate?
If your balance transfer credit card comes with a promotional offer the 0% or low interest on balance transfers will only be available for a set period of time (usually between 6 to 24 months, depending on the card and offer). Once this promotional offer ends, you'll be required to pay the revert rate. This will either be the standard interest rate on purchases or cash advances and will most likely be much higher than the promotional offer. The cash advance rate is generally higher than the standard rate on purchases. If you can, always try to repay your balance before the revert rate kicks in to avoid expanding your remaining debt with high interest rates.
Always make sure to check what the revert rate is and when it will kick in before applying for a balance transfer credit card. You can find this information within the Product Disclosure Statement relevant to your card. Once you've worked this out, consider how much debt you have, the length of the promotional offer and how much you'll have to pay to consolidate the entire debt before the revert rate rolls in.
What do different
|Credit Card Issuers||Reverts back to||Maximum Balance Transfer Amount||Minimum Balance Transfer Amount|
|American Express||Purchase rate||Up to 50% of your credit limit capped at a maximum of $7,500||n/a|
|ANZ||Standard balance transfer rate||95% of the approved credit limit||$100|
|Bank of Melbourne||Purchase||95% of the approved credit limit||$200|
|Bank of Queensland||Cash advance rate||80% of your credit limit||$500|
|Bank SA||Purchase||95% of the available credit limit your new BankSA credit card||$200|
|Bankwest||Standard balance transfer rate||95% of the approved credit limit||$500|
|CBA||Cash advance rate||90% of the approved credit limit||$500|
|Citibank||Cash advance rate||You can transfer up to 80% of your approved credit limit||$500|
|Coles||Purchase rate||No limit - but must meet criteria||No minimum - but must meet criteria|
|Community First||Purchase rate||All or part of the outstanding balance and/or limit of your existing credit card||$500|
|CUA||Cash advance rate||80% of your credit limit||$500|
|HSBC||Cash advance rate||Up to available credit limit on HSBC card||$500|
|Macquarie Bank||Purchase rate||Subject to your available credit limit||$500|
|NAB||Purchase rate||Maximum balance transfer of 70% of the approved credit limit. For example, if you had a $1,000 credit limit on your new card, you'd be able to transfer a maximum of $700 from another credit card.||$200|
|St.George||Purchase||95% of the approved credit limit||$200|
|Suncorp||Cash advance rate||Subject to lending criteria||$500|
|Virgin||Cash advance rate||80% of the approved credit limit||$500|
|Westpac||Cash advance or purchase (on selected cards) rate||95% of the approved credit limit||$200|
Balance transfer credit cards that revert to:
Balance transfers can be an efficient debt consolidation strategy, but you'll want to make sure you've repaid your entire debt before the revert rate comes up to bite you. Before applying for the credit card, confirm what the revert rate is and follow a budget to ensure you repay your entire balance before the revert rate applies.