EVERYTHING YOU NEED TO KNOW ABOUT BALANCE TRANSFERS

Most credit card providers offer incentives to people who transfer their existing credit card debt over to them, usually in the form of a lower interest rate on the debt.

This is known as a balance transfer.

Used correctly, a balance transfer deal can be a great way to pay off your credit card debt as quickly as possible, while minimising interest payments. But there are still traps you need to be aware of.

Here’s everything you need to know about balance transfers.

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Five Facts About Balance Transfers

A balance transfer allows you to transfer existing credit card debt onto a new card at a low rate of interest.
  • This can help you pay off your debt quicker and save money on interest payments.
  • The low interest rate usually expires after a set period of time, known as the introductory period.
If you don’t pay off your debt before the introductory period ends, it will revert to a higher rate of interest.
  • This is known as the revert rate, and it can be higher than a normal credit card interest rate.
  • Always aim to pay off the full balance of your debt before the introductory period expires.
The low rate of interest generally only applies to the transferred balance, not new charges on the credit card.
  • In most cases, new purchases will incur higher interest rates.
  • Be careful how you use your new credit card; the goal of a balance transfer should be to pay down debt, not add more.
Some credit cards offer a ‘lifetime’ low interest rate on balance transfers.
  • Lifetime rates are usually higher than regular balance transfer rates (which can be as low as zero per cent) but are still lower than normal credit card rates.
  • When you consider the high revert rate of a normal balance transfer deal, opting for a lifetime transfer rate can save many people money in the long-term.
Too many balance transfers can negatively affect your credit rating.
  • A balance transfer requires you to take out a new credit card and is recorded on your credit report.
  • Regularly transferring debts to new credit cards to take advantage of balance transfer deals may negatively impact your credit rating.

How much do Aussies owe?

Australians are drowning in debt.

According to the Reserve Bank of Australia, we collectively hold $32 billion of credit card debt that is accruing interest, an average of around $4,200 per credit card holder.

At an average interest rate of around 18 per cent per annum, this debt racks up interest charges of almost $6 billion a year, or $760 per person. That’s money that goes straight into your credit card provider’s pocket.

Check out MoneySmart’s credit card debt clock for an up-to-the-second count of how much money Australians are wasting every year on credit card interest payments.

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Choosing a balance transfer card

According to financial comparison website Canstar 254 of the 288 personal credit cards on offer in Australia offer a balance transfer deal.

That can make choosing the right card for your situation a little overwhelming.

Here are four questions to answer before you start comparing deals:

How much debt do I have?
  • Knowing how much debt you have and how much interest you’re paying will help you to assess the benefits of different cards.
How long will it realistically take me to pay it off?
  • How much can you really afford to put towards your debt? And how likely are you to stick to it? Be honest and make sure you have run the numbers through your budget.
Am I going to make additional purchases on the card during the introductory period?
  • Again, don’t kid yourself here. The rate for new purchases is very important if you think you might succumb to temptation next time you’re at the shopping centre.
How will I use the card after the balance is paid off?
  • If the new card is going to become your go-to piece of plastic, it’s important to look at every feature of the card as well, not just the balance transfer deal.
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Find cheap credit cards by comparing the best deals with balance
transfer offers and low interest rates.

American Express Essential Credit Card
American Express Essential Credit Card
  • Earn up to 1 Membership Rewards point for every $1 spent
  • $0 annual fee
  • 0% p.a. on balance transfers for the first 12 months
balance transfer rate
0% for 12 months
purchase rate
14.99%
annual fee
$0
Go to site
More info
balance transfer rate
0% for 12 months
annual fee
$0
purchase rate
14.99%
Interest free days
55
Rewards description
Transfer points to a range of airline programs or redeem your points for travel, gift cards, retail rewards and shopping gift cards.
St.George Vertigo Platinum
St.George Vertigo Platinum
  • 0% p.a. on balance transfers for the first 20 months
  • 12.74% p.a. on purchases
  • $99 annual fee
balance transfer rate
0% for 20 months and then 21.49%
purchase rate
12.74%
annual fee
$99
Go to site
More info
balance transfer rate
0% for 20 months and then 21.49%
annual fee
$99
purchase rate
12.74%
Interest free days
55
Interest rate on cash withdrawals
21.49%
Fee for cash withdrawals
2%, Min $2.50
NAB Premium Card
NAB Premium Card
  • 0% p.a. on purchases and balance transfers for 15 months
  • Complimentary insurances including overseas travel insurance
  • Platinum Concierge Service. Your own 24 hour, 7 day personal assistant
balance transfer rate
0% for 15 months
purchase rate
0% for 15 months then 19.74%
annual fee
$90
Go to site
More info
balance transfer rate
0% for 15 months
annual fee
$90
purchase rate
0% for 15 months then 19.74%
Interest free days
44
Interest rate on cash withdrawals
21.74%
Fee for cash withdrawals
2%, Min $2.50
NAB Premium Card
NAB Premium Card
  • 0% p.a. on purchases and balance transfers for 15 months
  • Complimentary insurances including overseas travel insurance
  • Platinum Concierge Service. Your own 24 hour, 7 day personal assistant
balance transfer rate
0% for 15 months
purchase rate
0% for 15 months then 19.74%
annual fee
$90
Go to site
More info
balance transfer rate
0% for 15 months
annual fee
$90
purchase rate
0% for 15 months then 19.74%
Interest free days
44
Interest rate on cash withdrawals
21.74%
Fee for cash withdrawals
2%, Min $2.50
NAB Low Rate Card
NAB Low Rate Card
  • Make purchases with our lowest interest rate and longest interest-free period
  • 0% p.a on balance transfers for 24 months (with 2.5% balance transfer fee)
  • Secure online application. Get a response in 60 seconds.
balance transfer rate
0% for 24 months (2.50% balance transfer fee)
purchase rate
13.99%
annual fee
$59
Go to site
More info
balance transfer rate
0% for 24 months (2.50% balance transfer fee)
annual fee
$59
purchase rate
13.99%
Interest free days
55
Interest rate on cash withdrawals
21.74%
Fee for cash withdrawals
2%, Min $2.50
Westpac Low Rate - Online Only Offer
Westpac Low Rate - Online Only Offer
  • 0% p.a. rate on balance transfers for 18 months when requested at card application
  • 0.99% p.a. on purchases for up to 3 months from card approval
  • Online only offer for new approved customers who apply by 11 April 2016
balance transfer rate
0% for 18 months (2.00% balance transfer fee)
purchase rate
0.99% for 3 months then 13.49%
annual fee
$59
Go to site
More info
balance transfer rate
0% for 18 months (2.00% balance transfer fee)
annual fee
$59
purchase rate
0.99% for 3 months then 13.49%
Interest free days
55
Interest rate on cash withdrawals
21.49%
Fee for cash withdrawals
2%, Min $2.50, Max $150
Coles Low Rate MasterCard
Coles Low Rate MasterCard
  • Low ongoing purchase rate of 9.99% p.a.
  • Earn 0.5 flybuys points for every dollar spent on the card at Coles Supermarkets
  • Low annual fee of $49 p.a.
purchase rate
9.99%
annual fee
$49
balance transfer rate
0% for 6 months
Go to site
More info
balance transfer rate
0% for 6 months
annual fee
$49
purchase rate
9.99%
Interest free days
62
Interest rate on cash withdrawals
19.99%
Fee for cash withdrawals
3%, Min $1.95
St.George Vertigo Platinum
St.George Vertigo Platinum
  • 0% p.a. on balance transfers for the first 20 months
  • 12.74% p.a. on purchases
  • $99 annual fee
purchase rate
12.74%
annual fee
$99
balance transfer rate
0% for 20 months and then 21.49%
Go to site
More info
balance transfer rate
0% for 20 months and then 21.49%
annual fee
$99
purchase rate
12.74%
Interest free days
55
Interest rate on cash withdrawals
21.49%
Fee for cash withdrawals
2%, Min $2.50
Bank of Melbourne Vertigo
Bank of Melbourne Vertigo
  • 0% p.a. on balance transfers for the first 18 months
  • 13.24% p.a. on purchases
  • Up to 55 interest free days on purchases
purchase rate
13.24%
annual fee
$55
balance transfer rate
0% for 18 months and then 21.49%
Go to site
More info
balance transfer rate
0% for 18 months and then 21.49%
annual fee
$55
purchase rate
13.24%
Interest free days
55
Interest rate on cash withdrawals
21.49%
Fee for cash withdrawals
2%, Min $2.50
American Express Essential Credit Card
American Express Essential Credit Card
  • Earn up to 1 Membership Rewards point for every $1 spent
  • $0 annual fee
  • 0% p.a. on balance transfers for the first 12 months
balance transfer rate
0% for 12 months
annual fees
$0
purchase rate
14.99%
Go to site
More info
balance transfer rate
0% for 12 months
annual fees
$0
purchase rate
14.99%
Interest free days
55
Rewards description
Transfer points to a range of airline programs or redeem your points for travel, gift cards, retail rewards and shopping gift cards.
St.George Amplify Platinum
St.George Amplify Platinum
  • 19.49% p.a. on purchases
  • 0% p.a. on balance transfers for 18 months
  • Double points on international spend
balance transfer rate
0% for 18 months and then 20.24%
annual fees
$99
purchase rate
19.49%
Go to site
More info
balance transfer rate
0% for 18 months and then 20.24%
annual fees
$99
purchase rate
19.49%
Interest free days
55
Interest rate on cash withdrawals
20.24%
Fee for cash withdrawals
2%, Min $2.50
Rewards description
Points are automatically credited to the Qantas Frequent Flyer program.
American Express Qantas Premium Card
American Express Qantas Premium Card
  • Earn up to 2 bonus points per dollar spent on eligible purchases
  • Receive up to 30,000 extra Qantas Points
  • Enjoy 2 Qantas Club Lounge invitations every year
balance transfer rate
0% for 12 months (1.00% balance transfer fee)
annual fees
$249
purchase rate
20.74%
Go to site
More info
balance transfer rate
0% for 12 months (1.00% balance transfer fee)
annual fees
$249
purchase rate
20.74%
Interest free days
44
Rewards description
Points are automatically credited to the Qantas Frequent Flyer program.
Virgin Money Virgin Australia Velocity Flyer Card - Purchase Rate Offer
Virgin Money Virgin Australia Velocity Flyer Card - Purchase Rate Offer
  • 0% p.a. on balance transfers for 6 months
  • 0% p.a. on purchases for up to 12 months
  • Enjoy an exclusive annual flight benefit. Conditions apply
Purchase Rate
0% for 12 months then 20.74%
Annual Fee
$129
Balance Transfer Rate
0% for 6 months and then 20.99%
Go to site
More info
Balance Transfer Rate
0% for 6 months and then 20.99%
Annual Fee
$129
Purchase Rate
0% for 12 months then 20.74%
Interest free days
44
Interest rate on cash withdrawals
20.99%
Fee for cash withdrawals
2.7%, Min $2.70
Rewards description
Points are credited to the Velocity Frequent Flyer program.
Westpac Low Rate - Online Only Offer
Westpac Low Rate - Online Only Offer
  • 0% p.a. rate on balance transfers for 18 months when requested at card application
  • 0.99% p.a. on purchases for up to 3 months from card approval
  • Online only offer for new approved customers who apply by 11 April 2016
Purchase Rate
0.99% for 3 months then 13.49%
Annual Fee
$59
Balance Transfer Rate
0% for 18 months (2.00% balance transfer fee)
Go to site
More info
Balance Transfer Rate
0% for 18 months (2.00% balance transfer fee)
Annual Fee
$59
Purchase Rate
0.99% for 3 months then 13.49%
Interest free days
55
Interest rate on cash withdrawals
21.49%
Fee for cash withdrawals
2%, Min $2.50, Max $150
St.George Vertigo
St.George Vertigo
  • 0% p.a. on balance transfers for the first 18 months
  • 13.24% p.a. on purchases
  • Up to 55 interest free days on purchases
Purchase Rate
13.24%
Annual Fee
$55
Balance Transfer Rate
0% for 18 months and then 21.49%
Go to site
More info
Balance Transfer Rate
0% for 18 months and then 21.49%
Annual Fee
$55
Purchase Rate
13.24%
Interest free days
55
Interest rate on cash withdrawals
21.49%
Fee for cash withdrawals
2%, Min $2.50
American Express Essential Credit Card
American Express Essential Credit Card
  • Earn up to 1 Membership Rewards point for every $1 spent
  • $0 annual fee
  • 0% p.a. on balance transfers for the first 12 months
annual fees
$0
Balance transfer rate
0% for 12 months
purchase rate
14.99%
Go to site
More info
Balance transfer rate
0% for 12 months
annual fees
$0
purchase rate
14.99%
interest free days
55
Rewards description
Transfer points to a range of airline programs or redeem your points for travel, gift cards, retail rewards and shopping gift cards.
Bankwest Zero Gold MasterCard
Bankwest Zero Gold MasterCard
  • No annual fee
  • Complimentary credit card international travel insurance for you and your family
  • Free worldwide emergency card replacement
annual fees
$0
Balance transfer rate
2.99% for 9 months
purchase rate
17.99%
Go to site
More info
Balance transfer rate
2.99% for 9 months
annual fees
$0
purchase rate
17.99%
interest free days
55
Interest rate on cash withdrawals
21.99%
Fee for cash withdrawals
2%, Min $4.00
American Express Velocity Escape Card
American Express Velocity Escape Card
  • 0% p.a. on balance transfers for the first 12 months
  • No annual fee
  • Earn up to 7,500 bonus Velocity Points, limited time only
annual fees
$0
Balance transfer rate
0% for 12 months (1.00% balance transfer fee)
purchase rate
20.74%
Go to site
More info
Balance transfer rate
0% for 12 months (1.00% balance transfer fee)
annual fees
$0
purchase rate
20.74%
interest free days
44
Rewards description
Points automatically transferred to your Velocity account
St.George Amplify Platinum
St.George Amplify Platinum
  • 19.49% p.a. on purchases
  • 0% p.a. on balance transfers for 18 months
  • Double points on international spend
Balance transfer rate
0% for 18 months and then 20.24%
annual fees
$99
purchase rate
19.49%
Go to site
More info
Balance transfer rate
0% for 18 months and then 20.24%
annual fees
$99
purchase rate
19.49%
Interest free days
55
Interest rate on cash withdrawals
20.24%
Fee for cash withdrawals
2%, Min $2.50
rewards_description
Transfer points to a range of airline programs or redeem your points for travel, gift cards, retail rewards and shopping gift cards.
Bank of Melbourne Vertigo Platinum
Bank of Melbourne Vertigo Platinum
  • 0% p.a. on balance transfers for the first 20 months
  • 12.74% p.a on purchases
  • $99 annual fee
Balance transfer rate
0% for 20 months and then 21.49%
annual fees
$99
purchase rate
12.74%
Go to site
More info
Balance transfer rate
0% for 20 months and then 21.49%
annual fees
$99
purchase rate
12.74%
Interest free days
55
Interest rate on cash withdrawals
21.49%
Fee for cash withdrawals
2%, Min $2.50
St.George Vertigo Platinum
St.George Vertigo Platinum
  • 0% p.a. on balance transfers for the first 20 months
  • 12.74% p.a. on purchases
  • $99 annual fee
Balance transfer rate
0% for 20 months and then 21.49%
annual fees
$99
purchase rate
12.74%
Go to site
More info
Balance transfer rate
0% for 20 months and then 21.49%
annual fees
$99
purchase rate
12.74%
Interest free days
55
Interest rate on cash withdrawals
21.49%
Fee for cash withdrawals
2%, Min $2.50

Credit Cards Switch and Save

Health check my card


Once you know the answers to these questions, you can start to
search for a suitable card. Here are the key features to look for:

The balance transfer rate and term
  • Think back to your repayment budget. While that zero per cent interest rate looks enticing, if you haven’t made a dent in your debt by the time it expires then it may not be worth it.
The revert rate and the interest rate on new purchases and cash advances
  • If you’re not intending to pay the debt off in full, or you’re going to be using the new card regularly, it’s important to know what you’ll be charged for it. For example, some cards do not offer any interest free period on new charges when there is an active balance transfer.
Other fees and charges of the card
  • Many of the best balance transfer deals are offered on premium cards that come with an annual fee.
  • There may be up-front fees and charges associated with the balance transfer, including a ‘balance transfer fee’.
  • Make sure to balance out the money you’ll save on interest payments on your current card against this fee, and don’t forget to factor in the features or rewards associated with the new card.
  • Finally, always remember to make your payments. There are often high penalty fees incurred for missed payments, and they’ll also incur a black mark on your credit report.

How to get the best deals

MoneySaver HQ is a great place to compare different balance transfer deals and find a card that’s right for you.

Always keep your eyes peeled for great one-off deals in the market place, particularly in the lead up to big spending periods such as Christmas or the end of the financial year.

Often credit card providers will pull out all the stops to try and win as many customers as possible at these times, which could benefit you.