- Balance transfer credit cards help users save money while clearing an existing card’s balance.
- Some cards offer rates as low as 8.99 percent on purchases.
- Applying online can often provide you with an instant decision.
- It is possible to get a card with a poor credit rating.
Credit cards are a useful financial tool and they’re very popular in Australia. An estimated 40 percent of the population has at least one credit card.1 As long as the balance is paid off in full each month, credit cards offer a lot of perks for little or no expense. However, if you hold onto a balance, interest charges can grow quickly and become overwhelming. Balance transfer credit cards can help people get out of that financial hole.
Garry L. / ShutterstockWhy Choose a Balance Transfer Credit Card?
The main benefits of balance transfer credit cards are the low fees and interest free periods they offer. A balance transfer card allows the holder to move debt from an existing card onto the new card. During the introductory period, no interest is charged on the balance transfer card.
So, if someone takes out a $0 balance transfer card, all the money they put towards paying down that card goes to the debt owed, rather than being eaten up by interest. Most popular cards have no annual fees, making them some of the most affordable borrowing options on the market.
Balance Transfer Credit Cards for Those with Poor Credit
There are some balance transfer cards available for people with bad credit. In general, the cards that offer large credit lines will want a credit check. However, there are some cards with lower balances that will accept people based on their income. It’s not strictly true to say they do no credit checks, because they’ll want to confirm the applicant’s identity through credit checking systems, but they place less weight on what the credit agencies say. As long as you make the payment on these cards each month you can expect them to have no negative impact on your credit file.
Perks Available with Balance Transfer Cards
The best balance transfer cards offer an interest-free period of a year or more. Many also offer purchase cashback deals, so those who don’t have a large balance to transfer can take advantage of cashback on their day-to-day spending. An individual with a good credit rating may be able to get a free premium card offering deals such as access to airport lounges, special offers such as Air Miles instead of cashback, and access to dedicated customer service hotlines.
Most Cards Offer Fast Approval
Gone are the days when obtaining a credit card was a lengthy process involving paperwork or visits to a bank. Today, most major credit cards offer fast or even instant approval. Apply online and submit proof of ID via a smartphone and you can expect to have your application processed within minutes. In many cases, applicants receive an instant response and can start the balance transfer process immediately, saving them money as they no longer pay interest on that balance.
The Best Balance Transfer Credit Cards for Australians
Most major banks, including Bank SA and the Bank of Melbourne, offer balance transfer credit cards. Some of these cards are targeted at customers with good credit histories and plenty of disposable income. Others will offer low limits for balance transfers to customers who have more modest incomes or some marks on their credit files. Even if these cards won’t cover the full outstanding balance on the card, it’s worth considering using them to transfer a portion of the balance, so that there’s a smaller outstanding balance on the other card, being charged interest.
1. Bankwest Breeze Classic Mastercard
The Bankwest Breeze Classic Mastercard is a balance transfer card open to people with an income of $15,000 or more. It has a starting credit limit of $1,000 and offers zero percent on balance transfers and purchases for 15 months. At the end of the interest-free period the rate increases to 8.99 percent. There’s no fee for this card for the first year. After the introductory year, the card has a $49 annual fee.2
2. Bendigo Bank Low Rate Credit Card
The Bendigo Bank Low Rate Credit Card offers zero percent on balance transfers and purchases for the first 20 months. After that, the interest rate is 11.9 percent, which makes this card an expensive one to carry a balance on. There’s a $45 annual fee, and the starting credit limit is rather low, at just $500. However, this card could be a good option for those with limited or poor credit histories who are unable to find a better deal from a mainstream provider.3
3. BankSA Vertigo
With a starting credit limit of $500, the BankSA Vertigo card is another interesting option for those who have limited credit histories. It has no fee for the first year and a $55 fee for future years. Customers can take advantage of zero percent of balance transfers for 32 months with no balance transfer fee. This is one of the most generous offers on the market. However, once the interest-free period is up, the rate jumps to 13.99 percent, so it’s essential to clear the outstanding balance during the promotional period.4
4. Bank of Melbourne Vertigo Card
The Bank of Melbourne Vertigo Card is very similar to BankSA’s offering. The limits and balance transfer offers are the same, as are the fees and interest rates. The Bank of Melbourne card may appeal to those who already bank with them or have other financial products from them. While the long interest-free period on balance transfers may seem appealing, users are encouraged to study the terms and conditions carefully. The interest charged on cash advances, for example, is even higher than the interest on purchases.5
5. NAB Low Rate Credit Card
NAB’s Low Rate Credit Card also offers an interest-free period of 32 months on balance transfers. The card’s starting limit is $1,000. Interest on purchases is charged at 12.9 percent. There’s no annual fee for the first year, and the fee is $59 thereafter. The higher-than-average annual fee and relatively high-interest rate on purchases mean this card is useful only for balance transfers. However, it’s a good stopgap for those who are trying to clear old credit card debts and repair their files before applying for more competitive cards.6
Make Sure You Can Pay Back What You Borrow
When used correctly, balance transfer cards can be incredibly useful. They give consumers breathing space to help them pay their debts down more quickly. Unfortunately, many people take out a balance transfer card then don’t close the original card after transferring the balance. Instead, they run up the balance on that card again, leaving them with more debt than when they’d started. It’s important to address the issue that led to the debt in the first place and learn new financial habits.
Help Is Available for Australians Struggling with Their Finances
Australians who are struggling with debts can turn to many different organizations for help. The Australian Financial Security Authority provides a list of useful helplines and websites, as well as information about the legal rights and options consumers have if they’re struggling to meet their financial obligations.7 By communicating proactively with creditors and working out a plan to manage their debts, Australians can often avoid hefty late fees, penalties, and court judgments that may damage their credit files in the long term.
