Balance Transfer Credit Cards Compare credit card interest rates and deals
Without the right management, debt can become uncontrollable. Making payments on your debt, even on low interest credit cards, is important not just for peace of mind but also your credit score. The Australian Securities and Investments Commission’s debt clock keeps a track of how much credit card debt we have accrued as a country, and notes that the average cardholder here gathers about $600 of interest every year.
When debt and interest payments get out of hand, or you simply want to consolidate your payments into one lump sum, there are solutions available – including balance transfers on a new credit card.
What is a balance transfer?
Credit card balance transfers are the process of putting existing debts from one credit card onto another. It’s a common situation that arises for a number of reasons, mostly to try and secure a better financial deal. Using credit card comparison tools is an excellent way of determining if it is the right move for you.
Why do people take up a balance transfer?
There are many low interest credit cards and credit card perks available from various lenders, and over time it may happen that a certain low credit card rate becomes more appealing than the one you are currently on. This is where credit card balance transfers are often used. Securing more appetising credit card interest rates, annual fees, rewards schemes or introductory credit card offers are just a few of the reasons why people take up a balance transfer.
Does a credit card balance transfer save you money?
It can and it can’t. Many introductory credit card offers include an interest-free period, or a temporary waiver on balance transfer fees, as a way of encouraging people to switch balances to a new credit card. However, it is important to look at the long term costs and benefits of each balance transfer credit card.
While it may seem financially beneficial in the short term, once interest rates kick in (often after six months) you may end up paying more than you initially were. Comparing credit card balance transfers is vital for making an informed decision and efficiently tackling credit card debt.
How can I make balance transfer credit cards work for me?
With careful planning and patience. A balance transfer to a low rate credit card can be a good way of paying down existing debt, but you must check what the fine print says about new purchases. Spending more on this new line of credit could put you further in debt.
Additionally, it may be wise to close your existing line of credit once you have conducted a credit card balance transfer. This prevents you from spending on two credit streams and putting yourself further into debt.
Can I still get credit card perks?
Yes. More often than not, a balance transfer credit card allows you to transfer debt to a new payment system, usually with a lower interest rate. Credit card perks and rewards will likely still exist on your new line of credit, but it is important to be patient. As mentioned above, new expenditure on your balance transfer credit card could put you back where you started – with a credit card debt to get rid of.
Research from Roy Morgan has shown that while debit cards are on the rise, credit cards are still more popular in Australia. They can offer easy access to spending as well as a sound way to manage debt, but comparison and planning is key. Use Rate City’s credit card comparison tool to determine if a credit card balance transfer can work for your budget and spending habits.