Dealing with credit card debt can be a challenge. One strategy to help manage and pay down this debt is using a balance transfer credit card. Start a search today to find the best balance transfer credit cards.
This type of card allows you to transfer existing high-interest credit card balances to a new card with a lower rate. Some balance transfer cards even have a 0% introductory rate! Exploring the options can pay off.
What Is a Balance Transfer Credit Card?
A balance transfer credit card is a financial product designed specifically for individuals looking to consolidate and pay off their existing credit card debt. These cards offer low or 0% interest rates for a set period, allowing cardholders to save on interest payments and focus on repaying the principal amount.
skaman306/GettyOnce the promotional period ends, the card’s interest rate usually reverts to a standard rate. So, it’s essential to plan and pay off the transferred balance within the low-interest period to get the most out of the card. When used correctly, balance transfer cards can be an effective way to pay off credit card balances.1
Why Balance Transfer Credit Cards Can Be Useful
Balance transfer credit cards offer various benefits that can help you manage and reduce your debt more efficiently. Let’s take a closer look at some of these advantages.
- Save on interest payments: The primary advantage of balance transfer credit cards is the potential savings on interest payments. With a lower interest rate or an introductory 0% interest period, you can allocate more money towards repaying your debt, rather than paying high interest on your current card.
- Simplify your finances: Consolidating multiple credit card debts into a single balance transfer credit card can help you simplify your financial management. Instead of juggling several cards with different interest rates and payment dates, you’ll have a single payment to make each month.
- Improve your credit score: Paying off your credit card debt with a balance transfer card can positively impact your credit score over time. By reducing your credit utilization ratio and making timely payments, your creditworthiness may improve, allowing you access to better financial products in the future.
Top Balance Transfer Credit Cards in Australia
When searching for the best balance transfer credit card to suit your needs, consider factors like promotional interest rates, balance transfer fees, and ongoing purchase interest rates. Here are some of the top balance transfer cards to include in your search.
- ANZ Low Rate: The ANZ Low Rate card offers a 0% interest rate on balance transfers for 30 months with a 1% balance transfer fee. This card also features a low ongoing purchase rate of 12.49% p.a. and an annual fee of $0 for the first year.2
- St.George Vertigo Classic: With the St.George Vertigo Classic card, you can enjoy a 0% interest rate on balance transfers for 32 months and a low 1% balance transfer fee. The card has a low ongoing purchase rate of 13.99% p.a. and a $55 annual fee.3
- Westpac Low Rate: The Westpac Low Rate card features a 0% interest rate on balance transfers for 28 months with a 2% balance transfer fee. This card also has a low ongoing purchase rate of 13.74% p.a. and a $59 annual fee.4
- NAB Low Rate: The NAB Low Rate card offers a 0% interest rate on balance transfers for 20 months with a 3% balance transfer fee. It also has a variable purchase rate of 12.49% p.a. and a $59 annual fee.5
Things to Consider When Choosing a Card
Here are some important factors to consider when comparing different balance transfer credit cards.
- Promotional Interest Rate and Period: When comparing balance transfer credit cards, it’s essential to consider the promotional interest rate and the length of the promotional period. A longer promotional period with a low or 0% interest rate will allow you more time to pay off your debt without incurring additional interest charges. However, be mindful of the interest rate after the promotional period ends because it may be higher than other cards.
- Balance Transfer Fees: Some balance transfer credit cards charge a fee for transferring your existing balance. It’s usually a percentage of the amount transferred. When comparing cards, make sure to factor in any balance transfer fees to determine the overall cost of using the card.
- Ongoing Purchase Interest Rate: While the main focus of a balance transfer credit card is to consolidate and pay off existing debt, you may still need to make new purchases using the card. Be sure to check the ongoing purchase interest rate because this will determine the interest you’ll pay on new purchases once the promotional period ends.
- Annual Fees: Many balance transfer credit cards charge an annual fee. While some cards may waive the annual fee for the first year, others charge it from the beginning. Consider the annual fee in your calculations when comparing different cards since it may affect your overall savings.6
- Repayment Plan: Before committing to a balance transfer credit card, develop a realistic repayment plan. Calculate how much you need to pay each month to clear your debt within the promotional period. Ensure that you can commit to making these payments and avoid making new purchases that could lead to additional debt.7
The Bottom Line
Balance transfer credit cards can be a helpful tool for Australians looking to tackle credit card debt by consolidating their balances and taking advantage of lower interest rates. By considering factors like promotional interest rates and balance transfer fees, you can choose the best card to suit your needs.
Remember to take some time to develop a realistic repayment plan to pay off your transferred balance within the promotional period and avoid accumulating more debt. Additionally, maintaining discipline in your spending habits and making timely payments can help you avoid getting into future credit card debt.
