Balance transfer credit cards

Use a credit card balance transfer to consolidate your debts at one low interest and take back control of your money.

By   |   Verified by David Boyd   |   Updated 3 Mar 2023

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Comparing balance transfer credit cards

ANZ Low Rate Visa Credit Card

ANZ Low Rate Visa Credit Card

Balance transfer

24 months at 1.99% p.a.

Balance paid off in

Calculate your repayments

Purchase rate

12.9% p.a. ongoing

Annual fee

$0.00 p.a. ongoing

Highlights

  • 1.99% p.a. on balances transferred for 24 months, with no balance transfer fee.
  • Low ongoing variable purchase interest rate of 12.90% p.a.
  • $0 annual fee and $0 p.a. additional cardholder fee.

Pros

  • Pay 1.99% p.a. for the first two years on balances transferred.
  • Low ongoing interest rates.
  • Up to 55 interest-free days on purchases.
  • No annual fee for life.
  • Free additional cardholders.

Cons

  • No rewards program.
  • No insurance.

A balance transfer allows credit card holders to transfer high-interest credit card debt to another card with lower interest rates. Instead of making repayments towards interest charges, applicants repay a portion of the debt principal each month, allowing them to clear debts faster. The interest rate on the new card could be as low as 0% for 6-9 months, depending on the bank's promotional offer.

Debt consolidation option

A 0% or low-interest balance transfer is a good option for debt consolidation. Depending on your new card's credit limit, you may be able to transfer more than one credit card or store card balance, a personal loan balance and even a hire purchase balance. Your old, high-interest debts are paid off, leaving you with a single balance to repay while taking advantage of the 0% or low interest rate.

Balance transfer fees

Some credit cards charge balance transfer fees, which usually range from 1% to 3% of the total transfer amount. While there are usually plenty of offers around with no balance transfer fee, it may sometimes be worth paying a small fee to secure a lower interest rate or a longer low-interest term.

Rates and offers

Various credit card balance transfer options can satisfy immediate and long-term needs. You'll need to consider the following standard features:

  • 0% introductory interest rate. Some cards offer a balance transfer a starting interest rate of 0% for six or nine months.
  • Low introductory interest rate. If you need longer to pay off your debt, consider a low-interest balance transfer offer, typically between around 2% p.a. to 6% p.a. for 12 to 24 months.
  • 'Life of the balance' low rate. This kind of balance transfer offer guarantees an ongoing low interest rate (e.g. 5.95% p.a.) on the transferred balance, until you have fully repaid it.
  • Revert rate. If you fail to settle all your debts within the introductory period (except for 'life of the balance offers), your interest rate will revert to a higher APR, generally the card's standard interest rate on purchases, but sometimes the even higher rate applied to cash advances.
  • Annual fee. Annual fees can range from $0, to as high as $390 for a premium card with a balance transfer offer.
  • Other fees. Other than the balance transfer itself, additional costs to consider are those you might incur by making late or returned payments or overseas transactions.

How to apply for and use a balance transfer

Applicants can transfer balances from one or more credit cards into a single balance transfer card. To successfully perform a balance transfer, consider the following steps:

  • Review your current credit card balance. To determine whether or not you need a balance transfer, first evaluate your financial situation. You can review your outstanding balance and billing statements through online banking, mobile apps or eStatements. Note important information, such as your current annual percentage rate (APR) and debts that you need to resolve immediately.
  • Select a balance transfer credit card. There are dozens of balance transfer credit cards offering various perks and benefits. Many will provide an interest-free or low-interest grace period on the transferred balance of anywhere between 6 to 12 months. Others might charge a transfer fee. Compare a variety of credit cards by weighing interest rates (including the ongoing interest rate on purchases), average monthly payments and annual fees. Some cards may waive the annual fee in the first year, or offer Airpoints or rewards points, or perks like free travel insurance and airport lounge access. Choose the card with the best combination – for your situation – of short-term debt clearance and long-term benefits.
  • Apply for the card and request a balance transfer. Make your card application (online is the easiest way, and you can do it here at Finty) and ideally request your balance transfer during the application process. You'll need to provide details of the balance(s) you want to transfer, including the credit card or loan account numbers. It may take a few days or several weeks for issuers to process your balance transfer. The bank issuing your new card will pay off your old balances, but will not close the accounts for you. You need to do that yourself.
  • Pay down your debt. Aim to pay off your debts within the introductory period to save as much as possible and avoid the revert interest rate. This means repaying as much of the balance as you can each month, rather than making just the minimum repayments (unless you already have enough cash in a savings account to repay the balance at the end of the promotional period).
  • Don't use your balance transfer credit card for new purchases until the balance is paid off. In most cases you won't qualify for the normal interest-free days on purchases while you have an unpaid balance transfer on your account. So use cash, or another card, until the balance is fully repaid and your interest-free days on purchases are restored.

Types of balance you can transfer

You can't perform a balance transfer within the same bank or credit card company. You can, however, transfer car loans, personal loans, student loans and hire purchase balances, as well as more than one credit card or store card balance, usually to an amount not exceeding 90-95% of the credit limit on your new card.

Your credit score will also dictate how much money you can transfer, since it will have a big influence on the new credit limit you are given. The better your payment history with previous lenders, the higher your chances of being able to transfer a large amount.

Balance transfer alternatives

A balance transfer credit card isn't the only solution to eliminating your debt. You can also consider the following alternatives:

  • Debt consolidation loan. A debt consolidation loan transfers multiple existing loans to a different lender. These loan products may have attractive repayment terms such as a lower interest rate and lower monthly payments. However, closing old accounts can reduce your credit score by reducing your credit mix.
  • Home loan refinance. If you have substantial equity in your home (that is, its market value is higher than the amount you owe on your home loan) you can release some of that equity as cash by refinancing your home for a larger amount and possibly a lower interest rate or longer term. You could then use the surplus cash to pay off high-interest debt like credit cards. But be aware that you are converting short-term debt into long-term debt.

Learn about balance transfer credit cards

  • FAQs

  • Pros & cons

  • Tips

Can I transfer a balance to a credit card issued by the same bank?

In most cases, no. Banks tend to limit their promotional offers to new customers only, since the whole point is to attract new customers, not retain existing ones.

Can you get a balance transfer fee waived?

It may be challenging but not impossible. Bank officers can waive a fee if an applicant has a more-than-agreeable credit score and can prove themselves a responsible new client.

Does a balance transfer hurt your credit score?

Balance transfers are likely to have little or no impact on your credit score, unless you apply for too many new balance transfer cards, one after the other. While applying for one balance transfer card may cause an initial decline in your score, as you repay the balance it will eventually increase your useable credit and lower your credit utilisation, lifting your score.

Does a balance transfer save you money?

Yes, provided you can secure a 0% or low APR and then pay off the entire balance within the promotional period.

How much money do balance transfers save you?

How much an applicant saves on a credit card balance transfer will depend on the promotional interest rate, promotional offer length, and how quickly they settle their debts. If they manage to repay the balance within the interest-free or low-interest promotional period, they can save anything from hundreds to thousands.

For example, if you transferred a balance of $5,000 from a card where you were paying 20% p.a. interest, to a new card with a 0% interest rate for six months and a 2% monthly minimum repayment, you would save $495.44 (or $395.44 if you had to pay a 2% balance transfer fee).

Is it worth paying a balance transfer fee?

Many cards offer promotional balance transfer deals without charging a balance transfer fee, but in some circumstances it may be worth paying a fee if that is part of the deal. If you are transferring a large amount, your interest savings will be well in excess of the fee – $991 interest savings when transferring a $10,000 balance from card with a 20% p.a. interest rate to take advantage of a 0% for six months offer, which even a 2% transfer fee would reduce by only $200.

It may also be worth paying a transfer fee to secure a longer promotional offer – for 12 or 24 months – even if it's a low-interest offer rather than being 0%

What happens if you fail to pay off your balance before the end of the interest-free period?

If your balance transfer is not fully repaid before the end of the promotional period set by your credit card provider, it will be subject to a much higher interest rate, usually the card's ongoing purchases or cash advance rate.

When shouldn't you consider a balance transfer?

A balance transfer may not be the appropriate solution for credit card-holders who can realistically pay off their debts within three months. In that case, perhaps having to pay a transfer fee for a new credit card may not be worth the attractive interest rate. Additionally, if you struggle to pay off your debts on time and will be tempted by the allure of spending on your new card (which has no interest-free days on purchases while the transferred balance is unpaid), consider other options instead.

Who should apply for a balance transfer?

A balance transfer is appropriate for those who have incurred high-interest debts. If you're finding it challenging to meet multiple repayments every month, you can pay off your debts quicker and with lower interest costs by applying for a balance transfer.

Balance transfer fee

Some balance transfer credit cards come with a fee of 1% to 3% of the total transferred balance. This fee reduces your net savings from the lower interest rate.

Debt consolidation

Instead of having to deal with several payment due dates each month, a balance transfer credit card keeps your repayment in one place. Having a single credit card removes the risk of several late fees and penalties, as well as potentially eliminating multiple annual fees.

Limited low interest rate period

The 0% introductory rate on a new balance transfer credit card doesn't last forever. After the initial intro APR balance transfer period, you could end up with a much higher interest rate than you were anticipating.

Lower credit card interest

If the reason you're ditching your old credit card for a new one is because of a high interest rate, then a balance transfer is a good idea. Credit cards typically have an APR ranging from 14% to 24%, rather than the 0%-2% p.a. you're likely to pay on the same debt after you transfer it.

Pay off debt faster

With a balance transfer credit card at low or zero interest, your monthly payments work to reduce debts more efficiently by being either entirely, or mostly, devoted to paying off the debt principal rather than interest.

Potential for mounting debt

A new card means more available credit. But don't fall into the trap of overspending again, or you could be creating more debt than you started with, especially since you won't have any interest-free days on purchases on your new card until you've repaid the whole balance.

Close your old accounts

While the issuer of your new card will reduce the balance of your old debts to zero, they won't close the accounts for you. Make sure you close them yourself, to avoid the temptation to start spending on them again, and to avoid any annual fees.

Keep paying off old debts

Continue to pay off debts on your old card while waiting for your balance transfer confirmation. Some issuers take up to a few weeks to process hefty transfers. You'll benefit from getting an early start.

Look for a card with low interest on purchases and a low annual fee

Although you need to avoid spending on your balance transfer credit card until the debt is fully repaid, it would be a good idea to choose a card that's gong to be useful for you once you arrive at that stage. The best kind of card to keep you out of debt in the future will be one with a low ongoing interest rate on purchases and a low or zero annual fee.

Plan your repayments

Create a repayment schedule. Though a balance transfer eliminates the need to keep up with multiple dates, you'll have to keep track of the interest-free promotional period's expiry date and the minimum payment due date on your new card. It would also be a good idea to divide your transferred debt by the number of months in the promotional interest period, and aim to pay off the resulting amount each month rather than sticking to just the minimum repayment.

Refrain from spending on your new card

Don't make purchases with your new credit card. The purpose of a balance transfer is to relieve debts. While its promotional interest rate may be promising, it almost certainly won't apply to new purchases, and in any case you won't have any interest-free days on purchases while you have a balance transfer debt.