A new type of balance transfer credit card to recently arrive in Australia is the 0% balance transfer and purchase credit card.
Featured Citibank Credit Card
Enjoy a range of platinum privilege with a low rate on purchases and Balance Transfer. Also include international travel insurance, higher credit, rewards program.
- $99 annual fee
- 11.99% p.a. on purchases
- 0% p.a. for 12 months with 3% handling fee on balance transfers
- Cash Advance Rate of 21.74% p.a.
- 55 days interest free
A 0% balance transfer and purchase credit card can help you control existing credit card debt while also giving you a low or 0% interest rate on new purchases you make on your balance transfer credit card. That’s right, you can actually benefit by making purchases on this balance transfer credit card because those new purchases won’t be charged interest over the same period as your balance transfer offer. Of course as with any credit card there is a trap to trip you up, so always make sure that the balance transfer period and rate are exactly the same as the purchase rate and period. Find out more now about how to choose and compare the best 0% balance transfer and purchase credit cards so you can be the type of customer or bank’s dread — an informed customer.
What Is A 0% Balance Transfer And Purchase Credit Card?
Before you can decide whether a 0% balance transfer and purchase credit card is the right choice for you, you will need to find out more about the features of this type of balance transfer card, and how they differ from other credit cards and other balance transfer offers available. Features of a 0% balance transfer and purchase credit card which can benefit you include:
- The opportunity to clear up bad debt and use your new credit card. If you are transferring a balance from an existing credit card then it is because that balance has gone out of control. It is most likely that the features, interest rate or provider of that credit card did not suit you or your needs and so you could not easily manage your purchases or make your repayments to avoid getting into bad debt. Therefore once you have transfer the balance from your old, unsuitable credit card you can start using a credit card which is better for you right away, while at the same time you repay your existing debt.
- The 0% interest rate and period should run simultaneously. Before you choose a 0% balance transfer and purchase credit card make sure that the interest rate and offer period run for the same amount of time. While will be the case with most offers some credit card providers will hide within the fine print that your purchase low interest-rate period ends before your balance transfer period. This can mean your new purchases start being charged interest while you are still working to repay your transfer balance and the savings you are making from having transferred that balance from a high interest-rate credit card are being negated as you repay your purchases at the higher purchase interest-rate.
- You’re getting two credit cards in one. Having a number of credit cards in your wallet can make it easy for your spending to get out of control. With different balances and different repayment amounts can be it a trick yourself into thinking that you don’t have that much debt. However with one credit card you have one monthly repayment, one balance and one credit limit and you have fewer credit cards to your name when a credit check is done.
- You may be getting shorter balance transfer offer overall. In exchange for being able to easily make new purchases on your balance transfer credit card, the offer period on a balance transfer and purchase credit card may not be as long as you can find on a solely balance transfer card. However if it is important to you to be able make new purchases on your balance transfer credit card, this shorter balance transfer and purchase low interest-rate offer is probably acceptable to you.
- The revert rate is usually the purchase rate. On a balance transfer credit card at the end of the offer period your balance typically reverts to be charged by cash advance rate. However on a balance transfer and purchase credit card the revert rate is usually the much lower purchase rate of the card. This means that even if you don’t pay off your balance and your new purchases within the offer period you will still only be charged a low standard purchase rate.
- Cash advances don’t qualify as purchases. This means that if you make a cash advance on your 0% balance transfer and purchase credit card it will not be eligible for the 0% interest rate. Instead your cash advance will start to accrue interest right away, trapping your lower interest rate purchases and balances in the same way as a standard balance transfer card can trap new purchases.
How To Compare 0% Balance Transfer And Purchase Credit Cards
If this style of balance transfer credit card is new to you, you may not know exactly what you are looking at. Therefore you need to know the traps to look out for and the comparisons to make to ensure you are getting the best deal for your needs, without playing directly into the hands of the banks who want you to trip up in your use of their balance transfer credit cards, so that they can go back to earning a higher rate of interest from the. As you compare 0% balance transfer and purchase credit cards, make sure you:
- Watch out for traps. Balance transfer and purchase credit cards often use the same payment hierarchy, where older purchases and balances are repaid first leaving your new purchases to earn higher interest or longer. This is the most common way you can be caught out in using a balance transfer and purchase combination credit card because you can easily go about paying off your balance and making everyday credit card purchases, only to find the promotional interest rate ends much earlier than you had thought.
- Choose the same balance transfer and purchase period. Just as new purchases on that traditional balance transfer credit card can become trapped if you are yet to pay off your transfer balance, so too can purchases on a specialised 0% balance transfer and purchase credit card, if the purchase offer is shorter than the balance transfer offer.
Am I Suited To A Combination Balance Transfer And Purchase Credit Card?
To get the most benefit out of a balance transfer and purchase credit card, you will need to ensure that you are best suited to this type of balance transfer. There are such a range of balance transfer offers because there are such a range of Australians who need to take charge of their credit card debt. Therefore make sure you choose the balance transfer credit card which is best suited to you, and you could benefit from a combination balance transfer and purchase credit card if:
- You don’t want a number of applications on your credit report. Your balance transfer credit card application will show up on your credit history. Plus if you also need to apply for a new everyday credit card because the one you have been using got you into unmanageable credit card debt, then application will also show up on your credit history. Whether you are trying to repair your credit history, all you are simply thinking of applying for a home of personal loan in the future and are aware of how your credit history will look, with a balance transfer and purchase credit card in one you can enjoy one credit card to your name and one application on your credit report.
- You don’t have another credit card to use. While it may not be necessary to have a credit card, it can make life a lot easier when you want to make secure purchases online or over the phone, or you don’t want to carry a lot of cash when you go shopping. However if you don’t have another credit card you can use after transferring the balance of an existing card to a balance transfer card, you can be tempted to use your balance transfer credit cards for purchases. With any card but a combination balance transfer and purchase credit card this can be dangerous, however this means you are perfectly suited to this type of 0% transfer and purchase credit card where you have two cards in one.
- You want one statement and one repayment. With two credit cards in one you have one easy monthly payment to make and one balance to worry about. You don’t have different credit card payments due at different times of the month and you don’t have to worry that when you calculate the totals of all of your credit cards the total is unmanageable, because you can see what you’re in for on one statement and you will know the moment that balance is close to becoming high.
- You don’t want to keep your standard credit card once it has been paid off with a balance transfer. It could be because your old credit card made it easy for you to get into debt, or you simply realise that it didn’t have the features which would ensure your money work harder for you with each purchase. Whatever the reason, clearing the balance on that card with a balance transfer is the perfect opportunity to close down an account and rid yourself of a financial product that wasn’t working for you. In choosing a balance transfer and purchase credit card in one your search for a new credit card can be over as you have a card which understands your needs and helps you manage your debt easily from the beginning.
- If you want to spend on a balance transfer credit card. Then a combination balance transfer and purchase credit card is the best option for you because it gives you the best of both those worlds in one place. However if you don’t intend to spend on your balance transfer credit card then it can be better balance transfer deals out there than those found on a combination card. Similarly if you are simply looking for a low rate purchase credit card, there can be better deals on low interest rate credit cards without a balance transfer offer attached.
- You are diligent with your budget and your purchases. While a balance transfer and purchase credit card make it easy to both manage an existing debt and avoid a new mounting credit card balance, it can also make it easy for both those balances to get out of control if you become too comfortable in your promotional low was 0% interest rate period. Therefore a balance transfer and purchase credit card will best suit you if you are the type of person who can be diligent in tracking their purchases and making repayments, while budgeting to repay as much as possible as soon as possible from your balance transfer as well.
How To Use A 0% Balance Transfer And Purchase Credit Card To Your Advantage
As you now know, the banks may offer you an attractive deal on a balance transfer and purchase credit card but they are really hoping that you become just another customer with a high balance which reverts to a high interest rate. To avoid giving the banks what they want, and instead take what you need from a balance transfer and purchase credit card, find out exactly how you should be using a 0% balance transfer and purchase credit card to make the most of your purchases transfers and payments. To make the most of your combination balance transfer and purchase credit card:
- Make your transfer as soon as possible. This will ensure that you do not miss out on the balance transfer and purchase credit card offer, and that you have as much time as possible to earn a 0% interest rate on your balance and make interest-free purchases on your new card.
- Know how you can make your balance transfer before you apply. This will allow you to eat early make your balance transfer within the offer period because some balance transfer cards will require that you transfer a balance within 30 days to qualify for the low or zero interest rate offer on the card. Therefore find out whether you can make the transfer in your credit card application, or whether you need to organise to go into a branch, pick up a balance transfer forms, or whether you can use phone or Internet banking to make transfer in your lunch break all when you have a spare minute after dinner.
- Repay your balance and your new purchases within the promotional period. While the revert rate on a balance transfer and purchase credit card will usually be the lower standard purchase interest rate, to exercise your new-found financial responsibility it makes sense to repay your balance and join new purchases with in the promotional offer period to avoid that higher interest-rate and lower the chances are you will find yourself in the same situation in the not too distant future.
- Budget to repay your transferred balance first. You are choosing a balance transfer offer because you want to repay an existing credit card balance, the benefits of being able to use your balance transfer credit cards for purchases as well is an additional extra. This means you need to make sure you can budget to repay your transferred balance before you start making new purchases on your card. If you find that you can afford to repay new credit card purchases while you are repaying your transferred balance, make doubly sure that you can pay off those new purchases within the low interest rate period, to avoid facing the same situation of having a high credit card balance earning a high interest rate.
- You can use your card for cash advances but don’t. Cash advances do not qualify as purchases and therefore do not qualify for the 0% interest rate on your balance transfer and purchase credit card. Therefore avoid trapping your transferred balance and your new purchases behind a high cash advance rate because your payments will continue to go towards your balance and your new purchases while your cash advance continues to earn high interest rate.
- Make your purchases as soon as possible. This gives you more time to repay your new purchases while they are still under a 0% interest rate offer. While you may have budgeted to be able to afford these new purchases while you were repaying a transferred balance is important to remember the difference that even a low or standard purchase interest rate can make to your repayments.
- Make regular repayments. When you are not charged any interest on your monthly credit card repayments these repayments can seem very affordable. Therefore it is easy to get into the comfortable habit of just paying the minimum monthly amount on your credit card to repay your transferred balance and your new purchases. However it is best to make regular repayments to clear your balance and your purchases as soon as possible rather than leaving it to the last minute when your offer is about to run out, because you never know when an emergency or an unexpected deal could arrive which will divert funds you had earmarked to repay your balance and purchases and those balances and purchases will now earn the standard interest rate on your card, bundling all of the hard work you went to, to manage your credit card debt.
- Don’t assume you can easily switch at the end of an offer period. If you go into a balance transfer and purchase credit card offer with the intention of transferring your balance and your new purchases to another balance transfer credit card if you are unable to repay them in full before the end of the offer, you can find you are met with an unpleasant surprise. As balance transfer credit cards become more popular, and balance transfer customers become more savvy and avoiding the higher revert interest rates, the banks in turn become more savvy at trying to trap you into those higher rates. As a result some banks will share lists of customers who regularly transfer between balance transfer offers to avoid the standard interest rate charged at the end of the offer. Therefore don’t bank on being able to transfer out of a balance transfer and purchase credit card offer if you can’t repay your balance and purchases within the offer period because you may find it hard to have a new balance transfer credit card approved.
As Australians become more financially responsible and aware, credit cards and balance transfer offer is involved to give you every opportunity to take control of your credit card debt and start living within your means. However the banks are not going to let you benefit from these offers indefinitely and you need to know how to play within the rules of a balance transfer and purchase credit card to make the most of your offer and avoid finding yourself in the same position of not being able to repay your credit card debt easily.
Posted on Tuesday, April 27th, 2010 at 10:41 am
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