Balance Transfer Credit Cards
By David Boyd on 4th June, 2009, last updated on Wednesday 29th MayTweet
Low-interest rate promos can save consumers with credit card debt hundreds of dollars by moving the balance to a new account.
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.
|Credit Card Offer||Purchase Rate||Balance Transfer||Annual Fee |
|Credit Card Offer||Purchase Rate||Balance Transfer||Annual Fee |
|Westpac Low Rate Credit Card|
Incredible 0% p.a. for 14 months on balance transfers and low $45 p.a.. VISA payWave technology for fast contactless purchases. 60 second online approval process. Apply by 22 June 2014.
|13.49%||0% for 14 monthsthen 13.49%||$45|
|NAB Low Rate Credit Card|
0% p.a. for 15 months on balance transfers. Fast 60 second instant approval process. Free additional card holder. Visa PayWave. Apply by 01 June 2014.
|13.99%||0% for 15 monthsthen 13.99%||$59|
|Citibank Clear Platinum Credit Card 12 Months|
0% p.a. for 12 months months on balances transferred. Plus 1/2 price annual fee for the 1st year. Platinum benefits: free wine every time you dine with the Citibank Dining Program, insurances, concierge service, purchase and extended warranty cover. Apply by 31 July 2014.
|12.99%||0% for 12 monthsthen 21.74%||$49 1st year|
|St.George Vertigo MasterCard|
0% p.a. for 14 months on balance transfers. No balance transfer fee. Low ongoing 13.24% p.a. on purchases. Get SMS or Email alerts when your card reaches a limit. Faster paying with MasterCard PayPass. Low $15,000 minimum income needed. 60 Second approval process. Apply by 20 June 2014.
|13.24%||0% for 14 monthsthen 13.24%||$55|
|Citibank Rewards Credit Card – Platinum|
0% p.a. for 24 months on balance transfers. 3% balance transfer fee applies. Free wine every time you dine with the Citibank Dining Program. Earn $1 = 1.25 Citibank Rewards points. Get a 60 second response to your application. Offers ends 31 May 2014.
|20.99%||0% for 24 monthsthen 21.74%||$199|
|ANZ Platinum Credit Card|
0% p.a. for first 12 months then 19.74% p.a. ongoing on balance transfers. No annual fee for the 1st year (waived if annual spend exceeds $20,000 per year). Visa PayWave. Overseas travel + medical insurance. 60 second approval process. Apply by 30 June 2013.
|19.74%||0% for 12 monthsthen 19.74%||$0 1st year|
|HSBC Credit Card|
No annual fee, ever. 0% on balance transfers for 6 months. Access to offers, discounts and benefits. Low minimum income of $20,000. Apply by 30 June 2014.
|17.99%||0% for 6 monthsthen 21.99%||$0|
|ANZ Low Rate MasterCard|
0% p.a. for first 12 months then 13.49% p.a. ongoing on balance transfers. Up to 55 days on purchases. Low minimum income needed. MasterCard PayPass. 60 second response to your application. Apply by 30 June 2013.
|13.49%||0% for 12 monthsthen 13.49%||$58|
|Bank of Melbourne Vertigo MasterCard|
0% p.a. balance transfer rate for 14 months. Low ongoing 13.24% p.a. variable interest rate on spending. Get an additional card holder at no extra cost. MasterCard PayPass. Apply by 20 June 2014.
|13.24%||0% for 14 monthsthen 13.24%||$55|
|Citibank Clear Platinum Credit Card|
Best of both worlds: 0% p.a. for 6 months on balance transfers and purchases. Low rate credit card with platinum level benefits: free international travel insurance, concierge service and more. Offer ends 31 July 2014.
|0% for 6 monthsthen 12.99%||0% for 6 monthsthen 21.74%||$49 1st year|
What is a Balance Transfer?
A balance transfer is when one bank pays off the outstanding debt at your old bank and transfers it to a new account with them. Typically, banks offer promotional deals with low interest rates for a period of time to attract new customers. The promotional offer can save a significant amount of money; many people use it repay their debt faster. See our FAQ below for questions about how balance transfers work, how they affect your credit score and more.
How Much Can You Save?
Say you currently have a balance of $3,000 – about average for Australia, according to research by the RBA – that is charged an interest rate of 15% per annum. This means approximately 1.25% in interest per month, which works out to be $37.50. If you were to switch to a card with 0% for 6 months, you would save around $225.
Or, let’s imagine you have a balance of $10,000 and paying 15% p.a., which works out to an interest bill of $125 per month. Switching to one of the long-term balance transfer deals offering 2% for the year would reduce your total interest payments on a $10,000 balance to $17 per month, saving you around $1,250 during the first year.
To see how this would affect your debt repayment, you can use one of the calculators below (but remember to account for transfer fees as well as annual fees):
- Balance transfer calculator – calculate how much money you can save by switching to a new credit card with a balance transfer offer
- Debt repayment calculator – calculate how long it will take to be debt-free
What You Should Look For
How do you get the best deal going? Start by asking these questions when comparing offers.
Q: Are there any fees? A: Unlike in the United Kingdom or United States, in Australia balance transfer fees are rarely charged. Banks sometimes charge an administrative fee, which can, depending on the size of your debt, significantly reduce your overall amount saved. Without a balance transfer fee, you are free to switch accounts as and when it suits you without having to worry about paying the bank for the service.
Q: What are typical promotional rates on balance transfers? A: The majority of banks offer new customers a balance transfer deal in the region of 1-3% for a period of 6-18 months. The 0% rate offers are the exception rather than the rule in Australia. Balance-transfer-for-life offers are few and far between.
Q: When does the debt need to be transferred? A: Most people take immediate advantage of a balance transfer offer and include the details of their debts in their application. However, banks may give you up to 3 months leeway. Failing to use the promotional offer when applying for a new card means your outstanding balance, which will still be on your old card, will be charged the standard interest rate. Therefore, you would unnecessarily be paying interest instead of saving money.
Types of Balance Transfers
In addition to the table above, you can compare credit cards which offer balance transfers with:
- 0% for 6 months – pay no interest on transferred balances for the first 6 months
- 0% on balance transfers & purchases – no interest on both balance transfers and purchases on the new card
- 12 months low interest – introductory low interest rates on transfers for a year
- An instant decision on your application – a collection of cards with an introductory balance transfer offer and a decision on your application in 60 seconds or less
- Higher credit limits – ideal if you need to consolidate multiple balances onto one single card with a low interest rate
- More than 12 months low interest – secure a low interest rate on balances transferred for the long term
- No annual fee – avoid annual fees while getting a low interest rate
- Rewards – a curated collection of cards that combine low rates with the ability to earn rewards points
Balance Transfers to Specific Banks
Select the bank you’d like to switch to from the following:
Balance Transfers: Frequently Asked Questions
Q: How do I initiate a balance transfer? A: You have two choices when switching to a new card. Either you fill in the details of the balance you would like to transfer on the application form, or you wait until the account has been opened and then initiate the process. You’ll typically get the same interest rate regardless, but you should be wary about delaying because most banks insist that you start the balance transfer within a set window of time if you want to get the introductory deal. Failing to do so may mean that you’ll have to pay a higher rate of interest on any debt transferred across to your new account.
Q: How long does it take to clear? A: Assuming that your application has been successful, your balance will usually be transferred inside two weeks.
Q: Can the outstanding debt of store cards be transferred? A: Yes, you can transfer what you owe on your store card (e.g. your David Jones credit card).
Q: How does a balance transfer impact my credit score? A: In short, it depends. If you apply for multiple credit cards in a short period of time, and want to consolidate a large outstanding debt, your credit score will be lowered. This is further compounded if some of your applications have been declined and you continue to apply for more offers. It is best to spread out your applications for new accounts as much as you can while keeping your existing accounts in good order by not missing payments or spending too much.
Q: What about my credit limit? A: Your credit limit, or the amount of money you are allowed to borrow, does come into play. If you intend to consolidate debt from multiple accounts onto a single card using a promotional offer, you may not be able to transfer the entire outstanding amount because your credit limit is not high enough. Should this happen to you, you can still transfer as much of your outstanding balance as possible to take advantage of the low interest rate and work towards paying it off. If you manage to pay off some of what you owe on your new card and essentially free up some space on it, you could move some of the amount still owed from your old card to your new card, but most likely at a rate that is higher than the promotional rate. As long as you space out your applications adequately, you could apply for another credit card and move the rest of your outstanding debt to it.
Q: Should I transfer a balance to a card with an annual fee? A: Assuming that you want to apply for a balance transfer credit card and use the low interest rate to pay back your debt faster, you’ll also want to avoid other fees as much as possible. An annual fee is one such charge you would rather avoid. However, if you are planning to move a very large balance at a low rate, the impact of the annual fee is diminished because of the amount of money saved per month on interest alone. Conversely, if you are moving a relatively small debt, the annual fee may practically wipe out any potential savings. Ideally, you are looking for a really cheap and prolonged balance transfer deal without an annual fee.
Q: In what order are payments allocated? A: Many people don’t realise that a bank doesn’t treat the amount owed as one single account. In other words, if you have transferred a balance at a low interest rate and use your new card to spend with, the bank will allocate payments to the cheapest debt first. So if you are not disciplined in your spending, you’ll not only be adding to your outstanding debt, but you won’t even be paying off the amount of money that was transferred. If you want to get rid of your debt, then don’t use your new balance transfer card to buy stuff!
However, there is an exception to this rule. Banks are now offering cards with a combined low interest rate on both balance transfers and purchases. Therefore, you would pay the same level of interest on any new purchases as you would on the amount of money that was transferred across. Still, the best thing to do is to avoid spending on your card until you are no longer in debt and can afford to pay off your monthly spend in full.
Q: Is it OK to use a balance transfer credit card to buy things with? A: This really depends on your financial situation. If you want to open a new account in order to pay less interest and use the money saved to pay off your debt, then no, it’s best not to spend with the card. If your new card has a combined promotional interest rate on balance transfers and purchases, and you can afford to pay for what you buy plus make a repayment on the debt, then you can use the card to buy with. However, in general it’s best to live within your means, pay off your debt first and only buy things with your credit card that you can pay off fully each month.
Q: Can you do an intra-bank balance transfer? A: Even if you have been with your bank for years, you’ll have to transfer your balance to an account with a different bank in order to take advantage of the introductory offer on interest. Most banks in Australia do not permit their customers to transfer a balance from one account held with them to another. This may sound like a lot of hassle, but in reality it isn’t, especially because most banks do not charge a fee.
Q: Can I just pay the minimum monthly payments on the balance transfer? A: Yes – but, given the debt-busting potential of a well managed balance transfer, it is far from ideal. If you’ve switched to a new card to take advantage of the low introductory interest rate, try to pay back as much as you can afford each month while the interest rate is low. Once the rate reverts to the higher level, if you still have debt, you can transfer the balance to yet another card, with a better rate.
Today’s Credit Card Stats
- 313credit cards are ready for comparison on this website
- 16.80%is the average interest rate on purchases
- $93is the average annual fee you can expect to pay
- 1.73%is the average balance transfer rate available