How does a balance transfer credit card help you save money?

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Name	Purchase rate p.a.	Annual fee	Balance transfer rate p.a.	Amount Saved
Westpac Low Rate Card	Purchase rate p.a. 13.74%	Annual fee $59	Balance transfer rate p.a. 0% for 26 months with 2% balance transfer fee, then 21.99%	Amount saved $1,653.37 over 26 months	Go to site More Info Compare	Save with a 0% p.a. interest rate on balance transfers for 26 months (with a 2% BT fee). Plus, a low 13.74% p.a. purchase interest rate.
Kogan Money Card – Exclusive Offer Exclusive Kogan Rewards Program	Purchase rate p.a. 9.99% for 18 months, then 21.99%	Annual fee $0	Balance transfer rate p.a. 0% for 18 months with 1% balance transfer fee, then 22.74%	Amount saved $1,335.99 over 18 months	Go to site More Info Compare	Save with 0% p.a. interest on balance transfers (with a 1% BT fee) and 9.99% p.a. on purchases, both for 18 months, plus, an ongoing $0 annual fee.
Bankwest Breeze Classic Mastercard	Purchase rate p.a. 12.99%	Annual fee $49	Balance transfer rate p.a. 0% for 24 months with 3% balance transfer fee, then 12.99%	Amount saved $1,613.89 over 24 months	Go to site More Info Compare	Save with 0% p.a. on balance transfers for 24 months (with a 3% BT fee).
Coles No Annual Fee Mastercard Flybuys	Purchase rate p.a. 20.74%	Annual fee $0	Balance transfer rate p.a. 0% for 9 months with 1.5% balance transfer fee, then 20.74%	Amount saved $709.81 over 9 months	Go to site More Info Compare	Save with an ongoing $0 annual fee and 0% interest on balance transfers for the first 9 months (with a one-time 1.5% BT fee).
Bankwest Breeze Platinum Mastercard	Purchase rate p.a. 12.99%	Annual fee $59	Balance transfer rate p.a. 0% for 24 months with 3% balance transfer fee, then 12.99%	Amount saved $1,593.89 over 24 months	Go to site More Info Compare	Get 0% p.a. interest on balance transfers for 24 months (with a 3% BT fee). Plus 0% foreign fees and complimentary overseas travel insurance.
Qantas Premier Platinum Qantas Frequent Flyer	Purchase rate p.a. 19.99%	Annual fee $349 first year ($399 after)	Balance transfer rate p.a. 0% for 12 months with 2% balance transfer fee, then 21.99%	Amount saved $578.32 over 12 months	Go to site More Info Compare	Earn up to 100,000 bonus Qantas Points. Plus, save with a reduced first-year annual fee and 0% p.a. for 12 months on balance transfers, with a 2% BT fee.
Qantas Premier Everyday Qantas Frequent Flyer	Purchase rate p.a. 19.99%	Annual fee $99	Balance transfer rate p.a. 0% for 12 months with 2% balance transfer fee, then 21.99%	Amount saved $828.32 over 12 months	Go to site More Info Compare	Get 2 bonus Qantas Points per $1 spent on eligible purchases in the first 4 months (up to 8,000 points), plus complimentary insurance.
St.George Vertigo Card - Cashback Offer	Purchase rate p.a. 13.99%	Annual fee $55	Balance transfer rate p.a. 6.99% for 12 months with 0% balance transfer fee, then 21.99%	Amount saved $562.66 over 12 months	Go to site More Info Compare	Get up to $500 cashback at eligible supermarkets and petrol stations in the first 180 days. Plus, a low interest rate for purchases.
Qantas Premier Titanium Qantas Frequent Flyer	Purchase rate p.a. 19.99%	Annual fee $1,200	Balance transfer rate p.a. 0% for 6 months with 0% balance transfer fee, then 21.99%	Amount saved No savings	Go to site More Info Compare	Get 150k bonus Qantas Points when you spend $5k in the first 3 months. Plus, 20% bonus Status Credits on eligible flights, with a $200k minimum income requirement.
St.George Vertigo Card	Purchase rate p.a. 13.99%	Annual fee $55	Balance transfer rate p.a. 0.99% for 28 months with 0% balance transfer fee, then 21.99%	Amount saved $1,700.06 over 28 months	Go to site More Info Compare	Get a 0.99% p.a. interest rate on balance transfers for 28 months (with no balance transfer fee).

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How can a balance transfer help me save money?

A balance transfer credit card is designed to give you more breathing room to pay off your debt without any interest for a promotional period. Depending on the size of your debt and the interest rate you're currently paying, this could save you tens, hundreds or thousands of dollars. Below we've explained how balance transfers work and how the different features can help you save.

Promotional balance transfer rate

Most balance transfer credit cards in Australia boast a 0% interest rate for a promotional period. Compared to the standard purchase rate (which can range from 8.99% on a low rate card to around 22% on a premium card), you can take advantage of the interest-free period to clear your debt without the burden of compounding costs. At the end of the promotional period, a higher revert rate will apply to any remaining debt from the transfer. To make the most of your balance transfer card, you should aim to pay your debt in full before this revert rate kicks in.

Length of introductory period

The length of the 0% balance transfer offer will vary from around 6 to 24 months. The longer the interest-free period, the more you can space out your repayments and generally the more you can save on interest costs. You should also consider other factors like the annual fee, any balance transfer fee and revert rate to decide which option is right for you.

Ideally, you should pick a balance transfer card that gives you enough time to pay off your entire balance in full before the revert interest rate applies. For example, let's say you have a debt of $5,000 and are looking at a card with 0% p.a. on balance transfers for 18 months. You'd need to allocate $278 each month to clear your debt in the first 18 months. If you don't think you can afford this much each month, look for a card with a longer interest-free period to spread out and reduce your monthly repayments.

How to use the balance transfer calculator in 3 easy steps

Now that you know how a balance transfer can help you save money, you can use the table above to compare which credit cards offer you the biggest savings in 3 easy steps:

Step 1. Enter the total debt/outstanding amount you would like to transfer
Step 2. Provide the interest rate that you are paying on your existing debt (if you don't have your interest rate on you, the average is around 18-20%)
Step 3. See the 'Interest Saved' column to find out which credit cards will save you the most money

If you want to find out more about a particular credit card, click the ‘More info’ link for a full review on the features and benefits.

balance-transfer-calculator

Example of table taken from 2 June 2020.

A balance transfer credit card can be a useful debt consolidation tool when you pick the right card and pay off your balance in full. As there are many 0% balance transfer credit cards on the market, make sure to compare your options before you apply.

Image: Shutterstock

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Written by

Sally McMullen

Producer

Sally McMullen was a creative content producer at Finder. Sally wrote about credit cards for almost 5 years, authoring almost 900 articles on Finder alone. She has also been published in Yahoo Finance, Dynamic Business, Financy and Mamamia, as well as Music Feeds and Rolling Stone. Sally has a Bachelor of Communication and Media Studies majoring in Journalism (Hons) from the University of Wollongong. See full bio

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13 Responses

BenMay 26, 2014

Say I have a home loan and I manage to get a credit card with a high limit (let’s say $20k), draw that as cash and pay $20k off my home loan and then balance transfer this $20k to another credit card with 0% interest is this all OK, will the banks stop this from happening, what am I missing.

When the interest free balance transfer period ends I just redraw my home loan (or move money from the offset account) and pay the credit card off and close it, seems like I could save about $1000/year in interest or more if I could do it with a bigger credit card limit transfer.

I’d obviously not buy anything on the credit card with the $20k balance transfer amount on it to avoid paying interest and just get another one for normal expenses which I pay off each month

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ShirleyMay 28, 2014Finder

Hi Ben,

Thanks for your question.

One of our money experts, Rob Dawson answers a similar question on the credit card comparison page. It’s likely that the banks will identify this and may decline your credit applications.

Cheers,
Shirley

NeilMay 24, 2013

Once a transfer has taken place, how long between banks does it take to reflect the transfer. I.E. My new card now has a -$8000 yet my old card still has +$8000 outstanding.
Thanks

Finder

JacobMay 24, 2013Finder

Hi Neil. It depends on how long it takes for your old card issuer to process the transfer. Lenders say that you should allow up to a week for the transfer to go through; however, in my experience, it was processed in a couple of days. Jacob.

How does a balance transfer help you save money?