A credit card balance transfer is a very useful way to reduce the amount of interest you have to pay. However, the amount of debt you can transfer is limited by the balance transfer limit.
If you want to apply for a balance transfer card but don't know how balance transfer limits work, then this no-nonsense guide is for you.
In this guide
What is a balance transfer limit?
A balance transfer limit determines the amount of debt you can transfer to a new credit card. The balance transfer limit is typically a percentage of the credit card’s credit limit.
About credit limits
Your credit limit is determined by the bank during the application process. It is based on a number of factors including your credit history and affordability.
It is important to note that the credit limit could be lower than the amount you want to transfer.
How the balance transfer limit is calculated
The balance transfer limit is typically calculated as the percentage of the credit limit that can be used for a balance transfer. Some banks allow the entire credit limit to be used for a balance transfer, but most range from 80% - 95%.
Therefore, if your credit limit was $2,000 and your balance transfer limit was 95%, then you could balance transfer up to $1,900.
Some banks use a fixed dollar amount for their balance transfer limit.
Balance transfer limits per bank
While this is not an exhaustive list, here are the balance transfer limits for banks who are prominent in the balance transfer market.
- ANZ: 95% of credit limit
- Bank of Melbourne: 80% of credit limit
- Bank of Queensland: 80% of credit limit
- BankSA: 80% of credit limit
- Bankwest: 95% of credit limit
- Citi: 80% of credit limit
- Commonwealth Bank: 95% of credit limit
- HSBC: 100% of credit limit
- NAB: 90% of credit limit
- St.George: 80% of credit limit
- Virgin Money: 80% of credit limit
- Westpac: 95% of credit limit
Options if your limit is not enough
If your application for a balance transfer credit card has been approved with a credit limit that is lower than what you need, you may have to reconsider your approach.
Here are some reasonable scenarios.
Keep your old credit card
Balance transfer what you can, and pay off the balance on your old card as soon as possible. Assuming you got 0% on the balance transfer, you can use the money saved to overpay and clear the debt faster.
Apply for another balance transfer card
You could apply for another balance transfer credit card and transfer the remaining balance from your old card to it. However, there are important considerations.
- There is no guarantee that your application will be approved. A rejected application will have an impact on your credit score.
- If you are approved, it is possible that the credit limit will still not be enough for your needs.
- Don't forget that most banks charge a balance transfer fee.
Do another balance transfer to your new card
It may be possible to free up some available credit on your new credit card by making overpayments and then transfer some or all of the balance from your old card.
There are several issues with this.
- Not all cards / banks will allow you to transfer a balance once the account has been opened.
- Even if it was an option, you will not be able to transfer the balance at the promotional rate.
- You may be able to request a credit limit increase to faciliate the additional amount, but there are pros and cons to that.
Apply for a debt consolidation loan
A debt consolidation loan is an alternative to a balance transfer credit card. Unlike a balance transfer card, you can apply for a loan of a specific amount. If approved, the funds will be transferred to your bank account and you will be responsible for paying off your credit card.
See the differences between balance transfers vs debt consolidation.