Balance Transfer Credit Card

Compare Balance Transfer credit cards 

 

Looking for a way to better manage your credit card debt, a credit card balance transfer with 0% Interest for a balance transfer period, maybe the answer.

 

A credit card balance transfer is the transfer of a debt from your current credit card to a new Balance Transfer credit card. This credit card balance transfer sees the money you owe on your current credit card transferred to a new Balance Transfer Credit Card which has a much lower interest rate applied to the balance transfer amount than your current credit card, which could deliver significant saving in interest payments.Balance Transfer Calculator

 

Once transferred you then make monthly payments on the debt which has been consolidated onto the Balance Transfer credit card. While the total amount owed would be the same, you stand to save a lot on interest costs because balance transfer credit cards tend to charge low interest rates - some even as low as 0% - for a fixed period of time, referred to as the balance transfer period. Use our balance transfer saving calculator to work out the interest savings you could make by switching to one of the balance transfer credit cards currently available.

 

The guide featured below is designed to help you understand balance transfer credit cards, how they can help you by significantly reducing your credit card interest repayments, and how to compare the balance transfer credit card offers to find the best 0% balance transfer one for your financial circumstances. Be aware that to gain approval for any of the credit card balance transfer offers you will need a good credit report.

Loading...

 
 
How to Select the Best Balance Transfer Credit Card
 

Making the decision to use a credit card balance transfer is the first step to paying off credit card debt, saving money on interest payments and taking control of your finances.

 

Once you make the move to a balance transfer credit card, you can realize the benefits straightaway as most balance transfer credit cards offer a 0% p.a. interest rate for an introductory period, which can range from 6 to 24 months. This means that for the duration of that period, your entire payment every month would go to paying down your credit card balance without accruing any additional interest charges, allowing you to clear the entire debt much faster. In addition, you won’t have to keep track of numerous due dates because if you are able to consolidate all your credit card debts into one balance transfer card, you would only need to make one monthly payment.

 

However, credit card balance transfer offers are not without their drawbacks. One is potentially having to pay a one-time balance transfer fee which is usually 1 to 2% of the amount transferred, though credit card balance transfer deals are avaialble where no transfer fees are charged. Secondly the balance transfer rate after the introductory period usually reverts to a relatively high purchase or cash rate. That’s why balance transfers only work to your best advantage if you manage to pay off your debt within the balance transfer period during which the low, or 0% balance transfer rate applies.

 

Choosing the right balance transfer credit card that best suits your financial needs can be quite tricky. This article aims to provide you with the important information to help you make the right balance transfer credit card choice. An important consideration when comparing balance transfer credit cards is the savings on interest you will make by making the switch, these savings can be calculated using our Balance Transfer Savings Calculator

 

Which type of balance transfer credit card should you go for?

 

  • 0% p.a. Balance Transfer for 6 months

If you are confident can you pay down the balance within this short time period a 0% p.a. Balance Transfer for 6 months is an option well worth considering as it will see you clear the debt, in a relatively short period of time. If you are not 100% confident of clearing the full debt within the 6 month balance transfer period you should extend your search to include balance transfer credit cards with longer balance transfer periods, which still offer the 0% p.a rate.

 

  • 0% p.a. Long Term Balance Transfer Credit Card

​If you have a large credit card balance to transfer, or wish to repay your debt over a longer period 0% p.a. long term balance transfer cards maybe a viable option. With Balance Transfer periods of upto 18 months they are designed to help spread the cost of paying off the debt whilst minimizing the interest charged on this debt, which in the cases of the 0% p.a. cards will be $0 so long as the credit cards terms and conditions are not breached. 

 

  • Instant Approval Balance Transfer Credit Card

Instant Approval Balance Transfer Cards provide a decision on your application within 60 seconds of hitting the "submit" button on your on line application, so if you want your balance transfer to happen quickly these fast decision balance transfer credit cards are worth consideration. It is important to understand that to gain approval for these fast decision credit card balance transfers you will need a bleamish free credit report. 

 

Keep in mind though that many credit card balance transfer offers do not fall simply into any of the general groupings discussed above. With so many balance transfer credit cards available today, it’s really a matter of taking into account all the financial factors that come with the credit card. These include not only the balance transfer rate and the introductory period but also the one-time balance transfer fee, the annual fee, and the interest rate to which the card reverts to after the initial rate expires.

 

Another key factor in your decision making is the amount that you intend to transfer. If you’ve accumulated large debt that you won’t be able to pay off within 6 to 12 months, then it’s best to look into longer terms, even if you would have to forego the 0% p.a interest rate.

 

Basic Do’s and Don’ts on getting a balance transfer credit card

 

  • DoChoose the credit card balance transfer that offers the right combination of low balance transfer rate and introductory period. A 0% p.a rate that only applies for 6 months will turn out to be a more costly deal than a 2.99% p.a. for 24 months, if you’re more likely to settle your debt within 2 years than 6 months.
  • DoTake note of the revert rate. Once the introductory low rate expires, some credit cards charge the regular purchase rate on the remaining debt, while other providers use the cash advance rate. Know which one you’re signing up for.
  • DoMake timely payments. Even if you’ve locked down on a great credit card balance transfer offer, the terms could easily change - and without you knowing about it beforehand - if you even make as much as one late payment.
  • Don’tBe tempted into accumulating more debt just because the purchase rate is also at 0% and the new credit card has a great rewards program as well. Keep your eyes on the prize: getting rid of credit card debt once and for all. Cheaper rates for new purchases and rewards won’t do much for you except perhaps lead you deeper into debt.
  • Don’tRule out a balance transfer credit card that charges an annual fee. There’s certainly more than a few no-fee balance transfer credit cards you can choose from. But by paying an annual fee, you could also be paying for more favorable terms for your balance transfer such as a longer introductory period and a lower ‘go-to’ rate when that period is up.
  • Don’tAssume that you can easily transfer to another balance transfer credit card when the low rate period is up. While new customers are always welcome, credit card providers still tend to shy away from consumers who seem like high credit risks. Jumping from one credit card to another shows that you could be one, and this adversely affects your credit score.

 

What if you can’t consolidate all your credit card debts into one balance transfer credit card?

 

If you’ve already accumulated substantial credit card debt, it may not be possible to transfer all of it into just one credit card as the approved credit limit may not be sufficient. In this case, you can choose from either of the following strategies to pay down your debt:

 

  • Pay off the card with the highest interest rate first. First and foremost, save on interest costs. If you can move your current 18% p.a. debt to a 0% p.a. balance transfer credit card, you’d be saving substantially on interest charges. Even better, the amount that would have gone to pay interest fees are now going towards the debt itself.

 

  • Pay off multiple cards with the lowest balances first. Consolidating smaller debts into one balance transfer credit card is also a good strategy towards simplifying your finances. With only a couple of credit card debts to pay down, you would be able to manage payments better and work your way towards eliminating these debts entirely.

Can I transfer a Personal Loan to a Balance Transfer Credit Card?

 

Yes, a limited number of Balance Transfer Credit Cards allow the transfer of Personal loans to take advanatge of Balance Transfer offers, and save on interest charges. Currently only Virgin Money and Citi offer the facility to transfer personal loans, the current offers are compared here on our Balance Transfer Credit Cards that accept Personal Loans page.

A Guide to deriving the maximum benefit from a balance transfer credit card

 

A shift of behavior from spending to repaying - balance transfer credit cards are focused on rewarding regular repayments with low or even 0% interest rates on the balances transferred, to gain this benefit a sustained shift from regular spending to regular repaying is an absolute must.

 

Consolidate to maximize your interest savings - consolidating any credit card debt onto a low interest balance transfer credit card can save you significant amounts in interest charges. Some balance transfer credit card offers also offer the opportunity to consolidate other types of debt to the card, such as car or personal loans, which will further increase your opportunities to save on interest charges, whilst also simplifying your credit arrangements to a single monthly repayment.

 

Duration of the Balance Transfer Period - To gain maximum interest savings you will need to have repaid the total balance transferred by the expiry date of the balance transfer period. To hit this milestone work out the monthly repayment you need to make to have the debt repaid in full, to do this simply divide the outstanding balance by the number of months left on the balance transfer rate, this is then the monthly amount you’ll need to repay to have the debt cleared by the expiry date.

 

The Balance Transfer rate applies only to the balance transferred - the low or 0% interest rate which is offered on balance transfers does not apply to any new purchases you make using your balance transfer credit card, these purchases will incur interest at the purchase rate of the credit card, following any interest free period days.

 

The impact of making Purchases using a Balance Transfer credit card - the primary impact of making purchases with a balance transfer credit card is that any repayments made against the card balance will not go straight toward clearing the balance transferred to the card. Following Government reforms in July 2012, credit card providers must direct repayments against the debt in descending order, from transactions that attract the highest interest charge to those that attract the lowest. With a balance transfer credit card where purchases have been made the order is therefore likely to be:

 

  1. Any Balance Transfer Fee
  2. New Purchases Made on the card
  3. The Balance Transferred

 

This order reduces the overall interest you will end up paying, though may hinder your ability to clear the total balance transferred to the card as you now have increased the debt by adding new purchases to the balance. 

 

Include any fees in your assessment of balance transfer card offers - You can find balance transfer credit card offers which do not charge any administration or set up fees, though some do, which generally is in the region of 1-2% of the balance to be transferred. This fee will be added to your balance from day one of the balance transfer period.

 

Never, Never, Never miss your monthly repayment - it is common for the card provider to penalize the missing of payments very heavily, in the worst cases this can see the balance transfer interest rate being lost, and the balance incurring interest charges at the credit cards revert rate or standard purchase rate.

 

Good to Excellent Credit Report only - Prior to applying for a balance transfer credit card you will need to be confident that your credit report is in good shape as only good to excellent credit reports will be accepted. If you are in doubt about the state of your credit report, get a copy and review it prior to making any applications.

 

Credit card debt and the expensive interest charges that come with it can put a considerable strain on your budget and hold you back from financial stability. The good thing is, there are options you can take to manage debt and one is getting a balance transfer credit card. Before deciding on which card to get, review all the terms and read the fine print first.

 

The four rules of successful Balance Transfers

 

Sticking to these 4 rules will help ensure you gain the maximum benefit of a balance transfer and avoid any nasty surprises.

 

1. Always clear the balance transferred in full, or transfer to another balance transfer credit card before the 0% or discounted rate ends, failure to do this will result in hefty interest charges.

Cheap balance transfer credit card deals are designed to make credit card providers money when you fail to pay them off, or switch to a new 0% balance transfer before the discounted rate ends. At that point, the interest rate jumps significantly in the range of 15% - 22% p.a.

 

What can I do if I’m unable to pay off my debt in full within the 0% p.a. period?

At the outset your focus should be to clear the amount you transferred over to the balance transfer credit card during the 0% balance transfer period, minimising the interest. If you are not able to clear the debt transferred you should consider making another transfer to a new balance transfer credit card before the balance transfer period lapses on your current deal. When accessing this option make sure you allow plenty of time to make the new transfer by commencing your application at least 6 weeks before the end of your current balance transfer period.Balance Transfer Calculator

 

To understand the interest savings you will make by switching to another balance transfer card try our free balance transfer calculator.

 

2. Repay AT LEAST the monthly minimum repayment (preferably more) or you run the risk of loosing the discounted balance transfer rate.

To retain the discounted balance transfer rate on the balance transferred you must pay at least the minimum monthly payments which are stated on your monthly statement. Failure to make these minimum payments each month will result in penalty fees and some card providers will withdraw the discounted rate, transferring your balance to a higher interest rate, commonly referred to as the revert rate.

 

How much should I aim to pay each month?

Your aim should be to pay more than the minimum stated repayment. Minimum payments are designed to make debts last as long as possible, which bolsters the profits of the credit card providers whilst making your debts very expensive to repay.

 

3. Avoid spending or withdrawing cash on balance transfer credit card.

Credit cards enable you to spend, transfer debt or withdraw cash but credit card providers must follows laws that stipulate that any repayments must be put towards the most expensive debt first. So spending on a balance transfer credit card isn't as bad as it was, as repayments first clear the spending, but it can still prove expensive, as you only avoid interest charges if you pay off the FULL balance, including transfers and purchases.

 

If I need to make purchases on my credit card, what is the best option?

If you need to spend on the credit card, it's best to get a separate 0% p.a. Purchase Credit Card or look out for an offer which features a 0% p.a. balance transfer and 0% p.a. purchase rate offer for the same length of time.

 

Why do I pay interest on my cash withdrawal if I've paid it off in full?

Unlike purchases, card providers do not offer any interest free periods on cash withdrawals. This means that even if you pay the value of your cash withdrawal off in full at your next statement date you will still pay interest from the date of making the cash withdrawal until the date it is paid off.

 

Does withdrawing cash on a credit card affect my credit score?

Withdrawing cash on your credit card isn't generally a good idea. Each time you do it, it's recorded on your credit record - and lenders may see it as a sign that you can't manage your finances and are struggling to meet your financial commitments each month.

 

The repeated use of the cash withdrawal facility on your credit card can indicate that you have limited funds and you are using your credit card to meet commitments each month that are really beyond your income levels.

 

Withdrawing cash on your credit card isn't the end for your credit score. If all other accounts are up to date, and you're not maxed out on your credit cards, then in isolation credit card cash withdrawals aren't likely to tip the scales of future credit applications. But, if you don't need to withdraw cash on your credit cards, then it's best not to take the risk.

 

4. Protect your credit score by applying for only one balance transfer credit card

The only way to know if you'll be accepted for a balance transfer credit card is to apply, but it’s important to know that each application is registered on your credit file. Multiple credit card applications in quick succession is a interpreted by the credit card providers as a sign of desperation, and tends to leads to a raft of rejected applications.

 

Will credit scoring affect the deal I get and my credit limit?

When you apply for any credit card, the credit card providers use the credit score not only to decide on an accept or reject decision on your application but also to decide what deal they are prepared to offer you. With Balance Transfer Credit cards this transpires in 3 ways:

 

1. Balance Transfer Period - High Credit Scores are generally offered the advertised balance transfer period, while lower scores of accepted applications are offered reduced transfer periods, so the advertised deal maybe for 24 months and a lower score applicant would be offered 18 months.

 

2. Balance Transfer Rate - In a similar vein to the balance transfer period, the 0% p.a. balance transfer rate is reserved for the high scoring applicants, with lower scoring applicants being offered deals with discounted rates, but not at the 0% p.a. level.

 

3. Level of the credit limit on your credit card - Lower credit scores tend to mean you get offered a lower credit limit, which impacts the value of the balance you are able to transfer to the balance transfer credit card.

 

Which Credit Card Providers can I make a Balance Transfer to?

 

As a consequence of some banks being part of the same banking group and others choosing to have their credit cards issued by a partner provider, some credit card providers restrict the providers from whom they will accept balance transfers. Here we outline these restrictions by each of the Credit Card Providers.

 

Credit Card Provider

Credit Card Providers to whom you cannot make a Balance Transfer to.

AMEX logoAmerican Express Credit Cards American Express
ANZ bank LogoANZ Credit Cards ANZ
Bank of Melbourne LogoBank of Melbourne Credit Cards Bank of Melbourne, Bank SA, St George
BOQ LogoBank of Queensland Credit Cards Bank of Queensland, Citi, CUA, Suncorp
Bank SA logoBank SA Credit Cards Bank SA, Bank of Melbourne, St George
Bankwest logoBankwest Credit Cards Bankwest
Citi LogoCiti Credit Cards Citi, Virgin Money, CUA, Bank of Queensland, Suncorp
Comm Bank LogoComm Bank Credit Cards Comm Bank
CUA Credit Cards CUA, Citi, Bank of Queensland, Suncorp
HSBC logoHSBC Credit Cards HSBC
IMB Credit Cards Bank of Queensland, Citi, CUA, Suncorp
NAB logoNAB Credit Cards NAB
St George Bank logoSt George Credit Cards St George, BankSA, Bank of Melbourne
Suncorp logoSuncorp Credit Cards Suncorp, Citi, Bank of Queensland, CUA
Virgin Money LogoVirgin Money Credit Cards Citi
Westpac LogoWestpac Credit Cards Westpac
Woolworths Money LogoWoolworths Credit Cards Woolworths

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Transfer Credit Card Comparison

 

The choice of Balance Transfer Offers is large which can make it difficult to compare the options relative to what you consider important, be it the balance transfer term, the balance transfer rate or the balance transfer fees. To simplify this comparison process we have divided the available balance transfer credit card offers into a number of sub categories which is designed to help you focus on the credit cards which meet your selection criteria.

 

 

Balance Transfer Credit Card Offers from the major Providers

 

Compare 0% Balance Transfer Credit Cards - Offering 0% Balance Transfer for upto 24 months these cards deliver the opportunity to maximise the savings on interest charges once you make the transfer, calculate the interest savings delivered by transfering from your current card, and compare the card details side by side. Read more

 

How much will I save on Interest payments by making a balance transfer? - Simply input the current purchase rate you are being chaged on your current credit card and the balance you are seeking to transfer and we'll show you the potential saving on interest, by making the switch to a balance transfer credit card. Calculate your saving

 

How do Balance Transfers Work? and How Do I save money by switching to a Balance Transfer Card? - the infographic walks you through each step of the Balance Transfer process and shows a working example of where the interest savings are generated by switching to a Balance Transfer credit card. Read more

 

Compare Balance Transfer Credit Card Offers - Credit Card providers are constantly refining their Balance Transfer Offers to keep them competitive, here we compare and review the latest Balance Transfer Offers and calculate the savings you could make by switching to one of the card offers. Read more

 

0% p.a. Balance Transfer for 6 month Credit Card Offers - These short term balance transfer credit cards focussed on clearing the transferred debt as quickly as possible to deliver savings on interest and a clean start within the 6 month balance transfer period. Read more

 

Joint Account Credit Cards with  0% p.a. Balance Transfer deals - Credit Cards which allow joint account holders are pretty rare in Australia, a number of the joint account credit cards compared in this article also include 0% p.a. balance transfer offers. Read more

 

Can I transfer a Personal Loan debt to a Credit Card? - Yes, a limited number of balance transfer credit cards offer the facility to transfer personal loan and line of credit debts to credit cards with balance transfer offers. Read more

Balance Transfer Credit Cards                                                                                 Rewards Credit Cards                                                              Low Rate Credit Cards                             

0% Balance Transfer Credit Cards                                                                             Frequent Flyer Credit Cards                                                         0% Interest Credit Cards

Long Term Balance Transfer Cards                                                                            Best Rewards Credit Cards                                                          Cheapest Credit Cards

No Annual Fee Balance Transfer Cards                                                                      Qantas Frequent Flyer Reward Cards                                          55 Interest Free Days Cards

Instant Approval Balance Transfer Cards                                                                   Velocity Reward Credit Cards                                                       Instant Approval Low Rate Cards

Balance Transfer Credit Cards - Frequently Asked Questions

A balance transfer credit card is one that lets you transfer your balances (or the money you owe) on other credit cards to it, where you would then make monthly payments on the debt. While the total amount owed would be the same, you stand to save a lot on interest costs because balance transfer cards charge low interest rates - some even as low as 0% - for a fixed period of time. Once that time is up, you'll have to pay higher interest on any remaining debt until the balance is fully paid.

Although different credit cards have varying balance transfer offers, the main feature of a balance transfer card is that the initial reduced or zero interest rate is applicable only to debt transferred from other credit cards. Balance transfer credit cards can also be used for regular purchases, and there are even some cards that extend the low interest to these new purchases for a limited period. Some credit card providers, while offering interest-free balance transfers, may charge a handling or processing fee for the transfer, usually about 3 to 5 per cent of the balance transferred. 

A balance transfer credit card is one that lets you transfer your balances (or the money you owe) on other credit cards to it, where you would then make monthly payments on the debt. While the total amount owed would be the same, you stand to save a lot on interest costs because balance transfer cards charge low interest rates - some even as low as 0% - for a fixed period of time. Once that time is up, you'll have to pay higher interest on any remaining debt until the balance is fully paid.

Although different credit cards have varying balance transfer offers, the main feature of a balance transfer card is that the initial reduced or zero interest rate is applicable only to debt transferred from other credit cards. Balance transfer credit cards can also be used for regular purchases, and there are even some cards that extend the low interest to these new purchases for a limited period. Some credit card providers, while offering interest-free balance transfers, may charge a handling or processing fee for the transfer, usually about 3 to 5 per cent of the balance transferred.

What should I look for in balance transfer card offers?

In choosing a balance transfer card offer, here are the most crucial features to compare and consider:

  • Introductory APR. APR stands for annual percentage rate or the interest rate that will be applied on your balance transfer. Transfer rates can be anywhere from 0 to 5 per cent. 
  • Promotional period. This refers to the length of the period during which the low or zero rate applies. Some card companies set it for 6 months, while others allow an introductory period of 8, 9, 12, 15 or 24 months.
  • Balance transfer fee. This is the one-time fee that some banks charge for a balance transfer. It could be a flat fee or a percentage of the amount transferred, typically between 3 to 5 per cent.
  • APR on new purchases and/or remaining debt. This is the APR that would apply on new purchases made using the balance transfer credit card, as well as on the remaining balance of the account as soon as the promotional period is up.

Opting for the right balance transfer card isn’t as simple as picking the lowest transfer fee or the longest term that offers 0% rate. These may be the best deals but you also have to carefully consider how long you think you can realistically pay off the debt.

For instance, providers that offer 0% interest with waived transfer fees are naturally the most attractive. However, there can be a caveat: once the promotional period is over and you still haven’t paid off the original balance, the APR at this point could revert to a very high one, such as the Cash Advance rate. On the other hand, a card that charges a modest transfer fee but offers the low balance transfer rate for a longer period and lower regular rates would be a better option if you feel you would need more time to pay off the debt.

It’s all a matter of making actual computations and evaluating which credit card terms would let you fully maximize a balance transfer credit card. 

There are three major benefits to getting a a balance transfer:

  • You save on interest costs and other fees. You enjoy a reduced or zero APR on the amount transferred from other credit or store cards. As a result, you also end up paying a lower amount than what you would need to settle if you are paying annual fees and higher interest across a number of cards.
  • You get to pay off your balance faster. The money that would have gone to paying high interest costs would now go towards paying the balance, reducing the time needed to settle the debt in full.
  • You simplify your financial life. Balance transfer allows you to easily manage debt and organize your finances better. By consolidating several credit card balances to just one credit card provider, you no longer have to think about having to make multiple payments to multiple companies on different due dates every month. 

The period during which a promotional balance transfer rate applies would depend on the credit card provider. Balance Transfer Credit Cards with the most attractive offers, 0% interest rate and no transfer fee, are available with balance transfer periods from 6 to 24 months.

 

 

Banks and financial institutions initiate balance transfer card offers as part of their marketing campaign to attract new clients. Hence, a balance transfer is normally made from one credit card provider to another.

If a provider offers a balance transfer to an existing credit card holder, it gains nothing out of the transfer and instead, loses the interest income it was already earning from that customer. On the contrary, even if the new provider were to give you (as a new client) a promotional zero interest balance transfer rate, it would still stand to earn from your new purchases, transfer fee (if any), and/or annual card fee. 

No. A lower interest rate means a lower cost of debt; this doesn’t necessarily equal to a lower monthly payment. A credit card account dictates a fixed minimum monthly amount, so the monthly repayment will depend on what the card company requires and not on the interest rate. Even if you move the balance to a card with lower interest, if the minimum monthly requirement is higher, this would not lower your monthly repayment amount.

However, this should not be reason enough for you to dismiss a balance transfer offer. Even if you don’t get to pay less every month, you will be debt-free more quickly because a bigger part of your payment will go towards settling the balance rather than servicing interest. You will also be paying a smaller amount in total since your interest costs are much less.

No. Card providers don’t usually require existing customers to close their credit card accounts even if the outstanding debt has been fully paid via balance transfer to another card. It is ultimately your choice whether to keep the card on standby or close it.

If you have entered into automatic billing agreements with utility service providers like phone and internet companies, then you really should maintain the card, at least until you have updated your billing information to the new card.

Closing a credit card could also have a negative impact on your credit score and this is another valid reason to keep the existing card around even when you don’t need it. When you cancel the ‘old’ card and the new credit card has a lower credit limit, the transfer of your outstanding balance would automatically increase your debt percentage or credit utilization (the ratio of your credit card balance versus the credit limit) and this is not good for your credit score.

If you choose to keep the old credit card however, here’s a word of caution: use it sparingly and with prudence. Otherwise, you could be setting yourself up for racking up more debt. Transferring credit card balances should be used mainly to pay off debt in the shortest time possible, not to give yourself opportunity to spend more.

The number of credit card balances that you can transfer to a single card depends on the provider of the balance transfer card. Some banks only allow 1 or 2 cards, while others can accommodate more.

The more important thing is that the total balance to be transferred from all the existing cards should be within the new credit limit set by the balance transfer card company. If the total amount exceeds the balance transfer limit, then you won’t be able to clear all the balances on all your existing credit cards. In this case, the best move would be to pay off the credit cards with the highest interest rates first.

The balance transfer limit is the maximum amount that you can move to the balance transfer card. It is dependent on the credit limit approved by the card provider.

The most that you can transfer to new card would be equal to the approved credit limit, while some banks allow cardholders to transfer only up to 90 to 95 per cent of the new credit limit. The remaining part of the limit could be used for standard purchases.

At the end of the balance transfer period, the introductory low interest rate would no longer be applicable.

Any remaining balance from the original amount transferred would be charged a new, higher rate. This can be the regular rate which is applied on standard purchases, or the cash advance rate which is usually much higher. The new interest rate is also referred to as the ‘revert’ rate.

There are some banks that charge a one-time fee for the transfer. This expense may be referred to as a balance transfer fee, handling fee or processing fee. It is typically computed as a percentage of the amount moved, usually between 3 to 5 per cent. Therefore the bigger the debt transferred, the bigger the fee. There are also balance transfer cards that waive the transfer fee in exchange for a higher introductory APR (not 0%) or shorter repayment periods.

To avoid having to pay unexpected fees, be sure to check the fine print and make the necessary calculations before turning over your application. 

The order of payments is the sequence by which the credit card provider applies your repayments to settle your credit card balance.

Owing to recent government reforms, a new payments order has been applied to credit card contracts since July 1, 2012. Credit card issuers are already required to direct repayments in descending order: from transactions that attract the highest APR to those that have the lowest APR, or, on which interest is not charged. With a balance transfer card therefore, payments will likely be applied in this order:

  • Interest charges;
  • Fees;
  • Cash advances or withdrawals;
  • Standard purchases;
  • Balance transfers

This order reduces the overall interest you pay, allowing you to save money on interest costs and pay off your credit card balance more quickly. 

When you acquire a balance transfer credit card, your credit score could be affected in a number of ways:

  • Credit utilization. If a significant percentage of your credit limit is taken up by debt, your credit score could be negatively affected. The thing is, when you avail of a balance transfer, you have no guarantee that the new credit card provider will grant the same or a higher credit limit than your existing card. If a lower credit limit is approved, which is often the case, and you opt to close your old credit account, the credit utilization goes up as soon as the debt is moved to the lower limit card.
  • Credit age. This refers to the length of time that you have been using credit. Credit scoring calculation for the credit age is done by getting the average length of all your credit accounts. While a balance transfer to an already existing credit card account would have no effect on your score, opening a new credit card will decrease your credit age, and could lose you a few points.
  • Credit inquiry. Sometimes, it’s not so much the balance transfer itself that would affect your credit score, but rather the credit inquiries that come with applying for a new card. Too many credit inquiries will lower your credit score.

It would seem that a balance transfer may do more harm than good to your credit score. But more than the effect on your credit score, it’s just as important to take into account the benefits of utilizing a balance transfer offer and see if these outweigh the possible impact on your credit standing.

Yes, Personal Loans can be transferred to a select number of 0% p.a. Balance Transfer Credit Cards, currently Personal Loan Balance Transfer Credit Cards are offered by Citi and Virgin Money, with balance transfer periods ranging from 6 through to 12 months.

Withdrawing cash on your credit card isn't generally a good idea. Each time you do it, it's recorded on your credit record - and credit card providers may see it as a sign that you are unable to manage your finances and are finding it hard to meet your financial commitments each month.

 

The frequent use of the cash withdrawal facility on your credit card can indicate that you have limited funds and you are using your credit card to meet commitments each month that are really beyond your income levels.

 

Withdrawing cash on your credit card will not significantly negatively impact your credit score. If all other accounts are up to date, and you're not maxed out on your credit cards, then in isolation credit card cash withdrawals aren't likely to tip the scales of future credit applications. But, if you don't need to withdraw cash on your credit cards, then it's best not to take the risk.