Credit Card Balance Transfer Offers

Balance Transfer Credit Cards

Balance Transfer Credit Cards

Credit Card Balance Transfer - How to maximise your savings

As competition in the Australian market intensifies, we have seen more credit card issuers introduce low introductory interest rate periods as a means of acquiring new customers. Many of these promotional deals are offering 0% for an introductory 6 month period, or a rate around the 6% mark for the life of the balance transfer period.

Simple steps to follow

1. Do not use the new card: Balance Transfer amounts transferred over onto your new card are actually paid off first. For example: if you transfer $5000 onto your new card at the introductory rate of 0% and you then make purchases in the month of $500, your new balance will be $5,500.

If you then make a payment of $500 , this $500 will go off the balance transfer amounts and not the new purchases. So your new outstanding balance amounts will be:
- $4500 at 0%
- $500 at (assume) 12%.

Suppose the next month you make purchased of $2000 and then pay this amount off. Your new balance will be:
$2500 at 0% $2500 at (assume) 12%.

As you can see, by using your credit card during your introductory period you are actually not maximizing the potential interest saving

2. Cancel up your old card: Do not fall into the trap of keeping your old credit card. As soon as you have received the new card you should cancel the old one. If you do not, then you can quickly find that your outstanding debt has quite quickly increased.

3. Pay off the balance within the introductory period: Once the introductory balance transfer period has ceased any outstanding balance transferred amounts will revert to a higher interest rate. Make sure you understand if this revert rate is the purchase rate or the cash advance rate.

4. Watch our for the revert rate: Make sure you understand what rate any existing into balance transferred amounts revert to att he end of the intro period. Some cards revert to the cash advance rate while others revert to the purchases interest rate

Balance Transfer Credit Card offers if used correctly can be an effective way to reduce interest rate charges in the short term, but you also need to take into consideration if the credit card is best for your needs in the longer term. Do not forget to look at the ongoing interest rate for both purchases and cash advances.

Balance Transfer Market In Australia 2009

Balance Transfer Market In Australia

Credit Card Balance Transfer Market In Australia

The credit card balance transfer market in Australia has now matured during 2009 and as a result there are a wide range of offers to consider. The current range of offers (as at June 2009) range from 0% for 6 months, 2.9% for 12 -18 months and around 4.9% for the life of the balance transferred.

The process to undertake the balance transfer is generally offered during the application process for the new card. The customer is asked to supply details of their existing credit card account and the amounts they wish to have transferred across to the new card. The alternative method is that once your card is approved you can then apply to have an amount transferred over to the new card. Understanding your terms and conditions is extremely important here, as in many cases the balance transfer promotional period starts once your new card account has been approved, so the longer you take to get any amounts transferred over to the new card, the less promotional period left to take advantage of the lower interest rate. Other promotional interest rate periods start once you transfer the amounts over, so you need to be clear here so you can plan your repayments.

Once the promotional period has expired, any outstanding balances from the initial balance transferred amount that were not paid off will revert to a non promotional interest rate. This rate varies amongst lenders with some reverting to the general purchase interest rate and others reverting the outstanding balance to a cash advance rate. The later means that in most cases the cash advance rate will be higher than the purchase rate, and in the case of a low interest credit card this can mean a difference of 10% in the rates. so again it's important to understand how these terms and conditions will affect you.

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