Save money by transferring existing debt to a new credit card with a long term balance transfer.
Super balance transfer credit cards are not quite the same as a regular balance transfer deal. In fact, if you use these cards the right way, you could be saving far more money than you think. With a regular balance transfer card, the object is to transfer your outstanding balances from cards charging high interest over to a card charging a far lower rate of interest.
Easy guide to super balance transfer credit cards
Balance transfers are designed to help the card holder reduce the amount of interest being charged on the outstanding debt amount and begin to repay the balance more quickly. However, super balance transfer credit cards are a little different. While they’re designed with a similar principle in mind, they have a unique feature that could help people to reduce other forms of debt far more quickly as well.
The primary difference with super balance transfer cards is that you’re able to transfer money out of your credit card into your bank account. If you’re paying 0% interest on your super balance transfer card, this is effectively a free loan.
How can a super balance transfer help you repay your debt?
If you’ve found a super balance transfer credit card charging 0%, you’re able to transfer funds from your card directly to your bank account.
Rather than paying high interest on other outstanding debts, such as an overdraft or a personal loan or even a mortgage, you could make extra repayments into these accounts to reduce the amount you owe. This can also reduce the amount of interest being charged on your other outstanding debts.
From there, you can repay the amount you withdrew from your super balance transfer card while paying 0% interest. However, this 0% interest will revert to a higher fee at the end of the promotional period. So make sure you only withdraw an amount that you know you can realistically pay back during the set period.
If you’re willing to be disciplined about transferring your money from low or no interest options over to higher interest options to reduce the amount you’re spending on interest, you can seriously begin to take control of your financial situation very quickly.
What’s the catch with super balance transfer cards?
Of course, as with every type of financial product, it’s important to understand the costs and features to get the greatest possible benefit. While using a balance transfer cards can be a logical way to minimise your interest costs, there are some things to watch out for:
- Cash advances. Before you begin transferring money from a credit card account over to a transaction account or other loan account, you may need to check that the money you withdraw won’t be flagged as a cash advance as they’re charged at much higher interest rates.
- Minimum monthly payments. If you completed a balance transfer, you’d need to be diligent about making at least the minimum monthly repayment due on your super balance transfer card on or before the due date.
- Revert interest rate. The 0% interest rate is usually only in place during the introductory period before it reverts to a much higher interest rate. Ideally, you’ll need to repay the outstanding balance before the period ends to avoid high-interest rates.
How to compare super balance transfer credit cards
Finding the right super balance transfer credit card doesn’t have to be difficult, but you should be sure you’re getting the right type of card to suit your purposes.
Super balance transfer credit cards have a unique edge over regular types of balance transfer cards in that you’re able to use the funds available on your 0% credit card to transfer into other accounts. You’re then free to use that money to repay other debts, such as overdrafts and personal loans, yet you’re paying 0% on the money you transferred.
However, different balance transfer credit cards offer different features. As such, you should compare your options to ensure that the benefits you’ll get from the product outweigh the costs.
What to look for in a super balance transfer credit card
There a few primary factors you should consider while comparing super balance transfer credit card offers. Here are some of conditions you may want to weigh up:
- The length of the low introductory rate or 0% interest period. Most low or 0% interest rate periods revert to a higher rate after a certain period. Make sure you can pay the balance back during this period to avoid getting burned when the revert rate kicks in.
- Is your transfer considered a cash advance? Not all balance transfer cards will allow cardholders to withdraw cash from your account. With some lenders, this could be flagged as a cash advance transaction and subsequently attract a much higher interest rate and a withdrawal fee. As such, make sure the credit card includes transferring cash into a current account.
- The credit card provider offering the deal. Many banks providers don’t allow balance transfers from an existing account with that bank. Not too many banks offer super balance transfer credit cards, so confirm that it’s not a regular balance transfer before applying.
Who is ideally suited to a super balance transfer card?
- If you have an existing debt. If you’re paying money each month for an overdraft or in high-interest charges on other debts, this could be the right card for you.
- If you can budget. If you’re a disciplined customer who can budget and repay effectively, then you could benefit from this card.
Who isn’t suited to a super balance transfer card?
- If you struggle to repay your balance. If you’re the type of customer who is likely to miss a payment here and there, it would be wise to avoid this card. To benefit from a balance transfer, you’ll need to be disciplined in making your repayments to make the most of the 0% interest rate.
- If you want to pay for purchases with your card. Balance transfer cards generally come with high-interest rates on purchases, so if you’re after a multi-purpose card, it’d be better to look elsewhere. Otherwise you could consider using a separate card for purchases and balance transfers as a way to reduce your debt levels.
- If you have bad credit history. Customers with a bad credit rating are unlikely to be approved for this type of card. If you think you could benefit from a low interest rate card, spend some time working on ways to improve your credit score before you apply.
How to use a super balance transfer card
A super balance transfer credit card can be a great way to regain control of your financial situation. When used correctly, these cards can enable you to reduce debts quickly and make significant savings in the process.
Here’s a step by step guide to using your super balance transfer credit card:
- Submit the application. Once you’ve located the right super balance transfer card to suit you, complete the simple online application form and submit it to the lender. You’ll need to provide some personal information such as income details (pay slips or tax returns), plus your employer’s information or accountant’s details if you’re self-employed. Once approved, you should receive your card in the mail.
- Work out your budget. Before you transfer any funds out of your super balance transfer card, work out how much you’ll need to pay each much to repay your balance before the 0% or low interest rate expires. If you miss a monthly payment, your 0% interest rate may be withdrawn and replaced with a higher rate, counteracting any previous savings you may have made.
- Transfer your balance. Once your direct debit is set up, you can transfer your balance to whichever account you prefer. For example, if you have an overdraft or loan that is attracting high fees or interest, you may wish to pay this off. Of course, if you’ve managed to repay most of your debts already, you can also benefit by transferring your balance into a high-interest paying account. You’ll benefit from paying 0% interest on the money you borrow, but you could be earning interest on that money from day one while your own cash flow pays it back over time.
- Don’t use your super balance transfer card for purchases. Your super balance transfer card is there to help you get ahead financially, so avoid using it for purchases or another purpose. If you remain disciplined, the card could help you repay your debt and make significant savings.
- Know when your 0% balance transfer deal expires. To avoid high interest rates, make sure you know when the 0% or low rate expires, and endeavour to repay your balance before this date. If you find that you’re unable to pay off the full balance, you might want to consider applying for a regular balance transfer credit card with a 0% interest rate to extend the time you have available to clear your debt completely.
- Stop using the card. Once your super balance transfer card has completed its job, stop using it. If you’re unlikely to use it again when your debts are paid off, you’ll want to consider closing the account. If you need a credit card for purchases, apply for a 0% purchase credit card or find one with a competitive ongoing interest rate on purchases instead.
Frequently Asked Questions
What long term balance transfer credit cards are available?
You can compare some of your options on our long term balance transfer credit card comparison page.
How much of my existing balance can I transfer?
This will depend on the card you use. While some cards let you transfer an amount up to the available credit limit, some only allow transfers of a percentage (such as 85%) of the credit card limit. Read the relevant Product Disclosure Statement to confirm what the balance transfer is before applying.
Can I complete a balance transfer to a bank if I already have an account with them?
Generally balance transfers cannot be made from one account to a new account under the same provider. Again, read over the PDS and terms and conditions to confirm this.