Want to save money on interest charges and pay off debt faster? Read this guide to find out how a 0% balance transfer credit card can help.
0% balance transfer credit cards let you move debt from an existing card to a new card with a low interest rate. The lower the interest rate, the more you can save and the faster you can pay off the balance as a result, which is why 0% interest balance transfer cards are so popular.
Here, you’ll find out more about 0% balance transfer cards, including how they work and how to compare them to make the most out of these offers.
0% Balance Transfer Credit Card Offer
Earn Reward Points with the HSBC Platinum Credit Card, a promotional balance transfer rate and the annual fee is refunded each year if you spend $6,000 on eligible purchases.
- Enjoy 0% p.a. for the first 15 months on application for balance transfers (reverts to the variable cash advance rate).
- $0 annual fee. Save $149 each year if you apply by 31 August 2016, are approved and reach a yearly spend $6,000 on eligible purchases.
- Earn 1 Reward Point per $1 spent on eligible purchases.
- Up to 55 days interest-free on purchases when you pay the full closing balance (including any balance transfer amount) by the statement due date.
- Benefit from a wide range of premium services such as Complimentary Insurances and Visa Platinum Concierge Service.
0% Balance Transfer Credit Cards Comparison
Rates last updated July 27th, 2016.
- Coles No Annual Fee MasterCard - Exclusive Offer
New exclusive offer of 20,000 bonus points if you apply by 31 July 2016.
July 4th, 2016
- American Express Essential Credit Card
$50 credit + 0% p.a. for 12 mos. on balance transfers w/ a one-off 1% credit plan establishment fee
July 5th, 2016
- Westpac Low Rate Card
New offer of 1% for 12 months on purchases + 0% for 18 months on BT. Offer ends 11 October 2016.
July 7th, 2016
This balance transfer guide explains:
What is a 0 balance transfer credit card?
0 balance transfers let you transfer your existing credit card debt to a new credit card with a lower interest rate.
How do 0% balance transfer credit cards work?
The advantage to getting a 0% balance transfer credit card is that you pay no interest during the introductory period when you move existing credit card debt or debts to the new card. With introductory offers ranging from a few months to a year or more, these cards not only have the potential to save you hundreds of dollars on interest charges, but also to help you pay off the debt faster.
To put this into perspective, let’s say you’re paying $100 a month towards a $1,000 credit card debt on a card that charges 20% interest. At this rate, it would take you 25 months to pay off the debt and cost you a total of $202 in interest.
If you moved that debt to a card with a 0% balance transfer offer for 12 months, it would take just 10 months to pay off the debt without any interest being charged.
5 key considerations to choosing the best* 0 balance transfer credit card for your needs
- 0% promotional period. Decide how long you need to pay off your existing credit card debt. Balance transfer deals provide 0% for 6 months, 12 months to even 20 months.
- Check how much you can transfer. Banks will generally allow you to transfer up to 95% of the approved credit limit. This means that if a credit card’s maximum credit limit is $40,000 you will be able to balance transfer up to $38,000 to this card if approved for the maximum limit. Refer to this guide for each bank’s balance transfer limit and how much they will allow you to balance transfer.
- Make sure you can transfer to the new bank. You won’t be able to balance transfer to some banks since they belong to the same credit provider. Refer to our guide on which banks you can balance transfer to, so your balance transfer request is successful.
- Are there any fees? Banks may charge a 1-2% fee for your balance transfer, which is charged on the total balance transfer amount. This detail is made clear on our website and credit card reviews so make sure you compare and read the terms before applying.
- What other features are you looking for? Balance transfer credit cards can also offer a range of perks including 0% on purchases, rewards points/ frequent flyer benefits and platinum cardholder benefits. These types of 0 balance transfer credit cards allow you to enjoy extra benefits whilst repaying your credit card debt.
How to compare 0% balance transfers credit cards
This checklist covers important factors you can keep in mind when looking at different cards, so that you can get a 0% balance transfer card that suits your lifestyle and needs.
- Length of the balance transfer introductory offer. The 0% interest period on a balance transfer card generally ranges from 3-20 months. The more debt you have, the longer you want the introductory period to be so that you have more time to pay it off.
- Balance transfer revert rate. At the end of the balance transfer promotion, the debt will revert to a higher interest rate (usually the cash advance rate). This means any balance that remains after this time will be charged interest, so the length of the 0% interest offer is incredibly important when comparing cards.
- The annual fee. As any credit card can offer a 0% balance transfer deal, the annual fees can range from $20 to $400 or more. There are also some credit cards that charge no annual fee for life, and others that halve or waive the annual fee in the first year, so make sure you choose a card with an annual fee that suits your budget.
- Rewards. Credit card rewards are earned based on how much you spend on the card, so they are not usually a priority when you want to pay of debt. But if you want to earn rewards in the future, you may want to consider this feature when you apply for a 0% balance transfer to save you adding another card to your wallet later on.
- Complimentary extras. Credit cards often come with perks such as complimentary international travel insurance, extended warranties and purchase protection insurance. These features can add value to a card but are usually not as important as features such as the balance transfer offer and ongoing fees.
- The purchase rate. If you plan to make new purchases on the card once you’ve cleared your debt, check the purchase rate as it will be applied from the day of the transaction when you carry a balance.
What is the catch (hidden costs) with a 0% balance transfer credit card?
While you don’t pay interest on the debt you move to a 0% balance transfer card, there are a number of other fees you should be aware of before you apply. Some of the most common costs include:
- A balance transfer fee. Some credit card issuers charge a one-off processing fee for balance transfers, which could be between 1% and 3% of the total debt you move to the new card.
- An annual fee. Balance transfer credit cards may carry an annual fee. Depending on the card, this could be anywhere from $25 to $250 or more.
- Minimum repayments. Even though the card charges 0% interest, you will still have to pay at least the minimum amount required for each statement period until you clear the credit card balance. Paying the minimum repayment might not be enough to clear your balance before the end of promotional period, so make an effort to pay as much as you can each month.
- Interest charges for new purchases. When you make a purchase on a 0% balance transfer card, the purchase rate will be applied to it from the day the transaction is made. Your repayments will also go to the higher interest debt, which are your purchases in this case. You can avoid this charge by not making purchases on the card until you have cleared the existing debt.
- Late payment fee. Some credit card issuers, including American Express, CommBank and Westpac, may charge a fee of between $9-$30 for late payments.
How to apply for a 0% balance transfer offer
These simple steps will help you find and apply for a 0% balance transfer offer that fits your budget and your needs.
- Check your total amount of debt owed.
Consider how much debt you want to transfer, and how long you think it will take you to pay it off so that you know what kind of offers will help you achieve your goal.
- Compare 0% balance transfer offers.
Look at all the different features and types of balance transfer offers, weighing them up based on your habits, lifestyle and current financial goals. Use the comparison table to weigh up your options side by side.
- Apply online.
Hit the ‘Go to site’ button and you will be redirected to the credit card’s secure application page.
- Fill out the application form.
You will need to provide personal details including your full name, date of birth, street address, drivers licence number and/or passport number. Keep these documents handy, and submit copies as requested by the credit card issuer.
- Include details of the balance transfer request.
There is a section of the credit card application that asks for details of any balance transfer requests. You will need to fill this out with information including the current credit card company, the account number and the total amount of debt you want to transfer to the new card.
- Submit the application.
You should get conditional approval within a few minutes and full approval in the following days (after submitting any supporting documentation).
Common questions about applying for 0% balance transfers
- Q: How long does it take to receive the credit card and when is the balance transfer process complete?
Once the application process is complete and you have been approved, the new credit card will be issued. This generally takes between 5-10 business days, but it could be as many as 21 days before you receive the card.
After you get the card, you will need to activate it so that your new issuer can begin the balance transfer process, and it could be as long as 21 business days from then before the debt is moved from your old card to the new one.
- Q: Can you transfer a balance between partners/ spouses?
Yes, providing that both you and your spouse are in a joint account before requesting the balance transfer. Refer to our guide on joint balance transfers to consolidate your debt with a partner.
- Q: Can I transfer a personal loan to a credit card?
Yes, certain banks allow you to transfer a personal loan debt to a new credit card. Refer to our guide here for the eligible banks and credit cards you can transfer to.
- Q: Can I transfer an outstanding credit card debt from a credit card overseas?
No, unfortunately this type of balance transfer is not permitted.
- Q: Can I request a balance transfer after submitting my application?
Most balance transfer offers must be requested at the time of application. However a number of banks allow a balance transfer to be requested after you have submitted your application.
- Q: How long does the 0% offer stay in place for?
The length of the 0% interest period varies between cards. You can check how long the 0% rate is available by looking at the introductory period in the comparison table we have provided above. For example, if a card offers 0% interest for 12 months, you will have 0% on your balance for up to 12 months from when the card is activated.
It’s important to take advantage of the 0% offer and start repaying your debt as soon as possible. If you wait two months to repay your debt under a 6 month offer, you’ll only have 4 months left to clear your balance before the revert rate kicks in. To get the full value from the 0% pay off as much as you can as soon as possible and do your best to repay the balance in full before the promotion ends.
- Q: Is there a balance transfer fee?
Some credit card issuers charge a balance transfer fee of between 1% and 3% of the total debt. Check with individual cards to see if this fee applies.
- Q: Do I have to transfer the whole balance from my current card to a 0% balance transfer card?
No, you can choose to transfer a portion of the balance. Just select the amount you want to transfer during the application process (and make sure you have a payment plan in place). Keep in mind that this will mean that you have two separate debts and sets of maintenance fees to manage.
The most popular questions about using 0% balance transfers
- Q: Can I make purchases whilst repaying my credit card balance?
No interest-free days will be provided whilst you have an outstanding balance. As a result any purchases you make will accumulate interest at the purchase interest rate whilst using a balance transfer offer. If you would like to make purchases with no interest whilst repaying your existing credit card debt, compare 0% balance transfers and 0% purchase credit cards.
- Q: Which transactions do my repayments go to first? Purchases, cash advances or my balance transfer debt?
Credit card repayments go to the highest rate of interest first. When you are using a low interest/ 0% balance transfer promotion, all repayments will go to purchases and cash advances first before your balance transfer debt. As a result it is ideal not to make purchases or cash advances when using a balance transfer.
- Q: Can I transfer my balance again to a different bank?
If your balance transfer promotion has ended and you still have an outstanding balance, you can apply for another balance transfer. You may like to consider a long term balance transfer for more time to repay your balance.
- Q: Do I have to make repayments?You still have to pay the minimum repayment for the card by the due date on each statement. This is usually 2-2.5% of the outstanding debt on the card. As mentioned, paying only the minimum repayment is unlikely to clear your debt before the end of the promotional period. If you want to avoid paying the revert interest rate on your debt, calculate how much you’d need to pay each month to repay the entire debt by the end of the offer and stick to that budget.
- Q: What happens to my old credit card?
Your old credit card will remain active until you cancel it. If you want to cancel your old credit card, wait until the balance transfer process is complete and submit a request to your old bank.
Mistakes to avoid with a 0% for 6 months on balance transfers credit card
In some cases, 0% balance transfer cards can end up being as expensive as any other option, so keeping the following pitfalls in mind will help you get the most out of a 0% balance transfer card.
- Only making minimum repayments. The minimum payment listed on your credit card statement is usually 2-2.5% of your total balance. If you only pay this each month, you will still have a huge amount of debt left over when the 0% interest period ends (and it could take years or even decades to pay off the rest).
- Not paying off the full balance before the introductory period ends. A higher standard balance transfer rate will be applied to any balance left over once the 0% interest period ends, leading to extra charges and increasing the time it will take for you to pay off the debt.
- Using your card for new purchases. Any new purchases on a balance transfer card will be charged interest from the day they are made. Usually the purchase rate is much higher and any repayments made will go towards paying this debt off before the balance that you transferred. Instead, consider a 0% purchase credit card for emergencies.
- Not checking credit limit requirements. Depending on the credit card issuer, your balance transfer can only make up between 70% and 95% of your credit limit on the new card. Make sure you consider this before applying for your card, and try to choose one that has the most reasonable requirements and credit limit options for your circumstances. Learn more about this here.
- Not making payments during the balance transfer process. You will still need to make any payments that are due on the old card before the balance is transferred to a new card, otherwise you could be charged late payment or dishonour fees.
- Applying for balance transfers too frequently. If you are unsure how long it will take to repay your credit card debt then a longer balance transfer may be more beneficial. Credit card applications are added to your credit file record and only reset every five years. Applying for credit cards more than twice a year may hinder your chances of being approved next time.
Before applying for a balance transfer, make sure to read the eligibility requirements and consider some of these mistakes to improve your chances of approval.
Other Frequent Asked Questions
What is the standard rate of interest?
Although you will be getting a very low rate of interest, you must remember it is only for a short period of time. After that, the balance will either be charged at the standard rate of interest or the cash rate. You need to compare these rates to make sure you find a lender with a rate that you are happy with.
What is the annual fee?
Many credit cards charge some sort of annual fee for using the service. Depending on your lender, and the type of card, the annual fees can range from $0 right up to $200 and above. If you are looking at gold or platinum cards with reward schemes, the chances are you will pay a much higher fee. Have a look at the fees and benefits, and decide whether they are really worth the cost. If you do not need them and will not use them, then you are far better off finding a card with a cheaper annual fee.