Balance Transfers For 12 Months Credit Cards

The 12 Month Balance Transfer: Your Guide

In Australia there is a decent choice of low interest balance transfer deals for 12 months. While these do not generally have a 0% offer, they will have a much lower balance transfer rate than the rate your existing credit card charges. When you consider that the typical credit card will charge around 20% p.a. on outstanding balances, it’s easy to see just how much you can save when you take advantage of a lower balance transfer rate lasting for 12 months. Not only will you save money, but in securing a low interest rate for a year you can also dare to plan ahead and steadily pay back your debt. Debt free in a year? It’s possible with one of these long balance transfer offers!

Debt Free in 12 Months? Your Questions Answered!

Q: Who are these offers designed for? A: While anyone can apply for one of these cards, those who would like to secure a low interest rate for 12 months so that they can draft a budget with a payment plan to pay back their debts will benefit most.

Q: How beneficial is a 12 month balance transfer? A: Very! If you have a large debt to repay and you don’t think that 6 months is long enough to get rid of it, then locking in a low rate for a full year means that you can save a lot of money. Assuming you’ve had your existing credit card for some time, you’ll probably be paying around 20% p.a. on it. Moving to a 12 month deal at a lower rate of, for example, 2.9% p.a. could save you hundreds of dollars. Apart from the amount of money you can save, securing a lower interest rate for longer gives you a certain degree of security. Knowing that you’ll be charged a low rate for 12 months means you can plan ahead for the year and aim to be debt free, or thereabouts, by the time the promotional rate expires.

Q: Short term at 0% or 12 months at a low rate: what is better? It really depends on you, your personal situation and your plans for the future. If you have a small debt that you can get rid of inside a few months, then a short term 0% balance transfer may be the better option for you. If you have a larger debt that will take longer to pay back and you don’t want to have to transfer the balance several times, then a 12 month or longer offer is hard to beat when the interest rates are as low as they are.

Q: Most of these offers have an annual fee. How will that affect savings? A: An annual fee is often charged to cover account maintenance with the average annual fee coming in at approximately $90. While it’s frustrating to pay just for the privilege of having an account, it can be worth paying it just to lock in a low rate. If you have a large outstanding debt on your existing card and are paying nearly 20% p.a. in interest, then switching to a 12 month low interest balance transfer deal means you could save several hundred dollars. Even though the annual fee will reduce the amount you save, if it means you get a much lower interest rate then it will still be worth it. Your alternative is to apply for a balance transfer card without an annual fee, but these cards are not as widely available and their balance transfer deals are usually not as long lasting, which will mean having to switch to another card within a few months before the rate reverts to a higher level.

Q: What happens after the promotion expires in 12 months? A: The introductory balance transfer rate will last for 12 months, but when it runs out you have a decision to make because it will typically revert to either the purchase rate or the cash advance rate. If you haven’t paid off your debt you may wish to do another balance transfer so that you can keep paying back your debt at a lower interest rate. Alternatively, if you have cleared your debt you may want to stick with your credit card (because it offers other attractive features such as a reward program) or switch to a different card.

Q: How can I apply for one? A: Easily! The application for a cheap balance transfer credit card like one of those listed above is typically very straightforward. Once you have chosen the card you would like to apply for, click on the 'Apply’ button. You’ll be shown the bank’s minimum criteria, so if you meet their requirements you can click 'Yes’ to go to the secure online application form. At this stage you’ll have to enter in all your details as accurately as possible. It’s easier and works out better if you collate all your documentation before starting to fill in the form. During the application process you can enter the details of any balance/s you would like to transfer to your new account. If your application is approved by the bank, your card will arrive with you shortly thereafter.

Q: Can I transfer more than one balance? A: Yes you can. During the application process you can enter the details of one or more balances that you would like to consolidate onto the new account. Be aware that most banks will allow you to transfer up to 95% of your credit limit. If you have more debt that your credit limit, you can consolidate the most expensive debt to clear it at a lower interest rate first. You also don’t have to transfer all of your debt if, for some reason, you don’t want to.

Q: Can I use my new account to buy things with? A: You can use the new card to purchase things with, but if you want to get rid of your debt it would be best not to. Spending on your new card will only add to your debt, unless you pay off your purchase in full each month. Keep in mind that the purchase rate will usually be much higher than the introductory balance transfer rate. Credit cards with 0% on purchases are available, but may not have a balance transfer offer for as long as 12 months.