Balance transfers allow you to transfer high-interest debt to another card with a lower interest rate – and sometimes with no interest – during a set promotional period. If you are carrying credit card debt month to month, a balance transfer could therefore mean substantial savings. The RBA, for example, has found that the average Australian carries a balance of $3,000, at an average rate of 17% per annum. Transferring that balance to a credit card with a six-month 0% rate would save over $250. If you have debt on several credit cards, consolidating them into one card has the additional benefit of less paperwork every month.
Australian card users are at a particular advantage: unlike companies in the United Kingdom and United States, Australian banks rarely charge a balance transfer fee. The transaction may incur an administrative fee, but overall this leaves the Australian consumer much more flexibility in moving debt around.
Transferring balances is not without its pitfalls. A high annual fee on a new card, for instance, could cancel potential savings if your debt is relatively minor. Applying for several credit cards in a short amount of time, particularly if you have a large outstanding balance, will lower your credit score, especially if some of the applications are denied. Furthermore, banks typically charge a much higher rate on new purchases, so even though payment allocations have been changed so that payments go towards more expensive debt first, if you are planning on using the new card for purchases your savings could be nulled. Read the FAQ section below for more information.
The cards listed in this section are specifically geared toward balance transfers, and let you initiate a transfer during the application process. If the application is successful, you can usually expect the balance to transfer from the old card within two weeks. Normally, the bank will also give you a window of up to three months after opening an account to take advantage of the promotional interest rate.