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The Australian Guide to Credit Cards

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Finding The Best Balance Transfer Deal

Learn how you can find the best credit card for balance transfers. Understand what to look out for and how such cards really work.

There are two issues to deal with when looking for the best balance transfer card. First of all, you must work out your financial situation so you know how quickly it will be possible to repay your debt at a certain rate of interest. This means being honest about how frugal and disciplined you can be with the money and income you have available. The other point is to understand how balance transfer cards work. If you fail at this, you may end up wishing you hadn’t bothered in the first place.

As for your finances, this is a very personal situation that will apply only to you. Advice from anywhere else will either be dealing in generalities that fit to a limited degree, or specifics that do not relate to you at all. If you need to take advice from someone else to better grasp your situation, then go ahead.

In terms of the balance transfer card itself, these work the same way no matter which card you choose. The only variables are the interest rate and the length of the offer period. Choosing the correct offer period is dependent on analysing your finances to see how long you require to pay off your debt. Generally speaking, the longer the offer period, the higher the interest rate. The norm is for six months at 0%, twelve months at 2% to 4%, and a slightly higher rate for the lifetime of the debt.

Once you establish how long it will take to clear your debt, you should find the best interest rate for that period. You should also keep an eye on the annual fee, but $10 difference here or there should not be a deal-breaker if the interest rate and offer period are right.

Other issues you may want to consider are the regular rate for purchases once your debt has been cleared, and other perks that the card may feature, such as rewards programs. The regular rate for purchases is very important in case you fail to clear your debt in time and your rate reverts to the regular one. Check the fine print on this, in case the regular rate for the remainder of your unpaid debt is the cash advance rate of around 20%.

Lastly, check to see how long you will have to make the transfer. Some balance transfer cards will not allow you to make the transfer once you have had the card for more than 90 days, although some may stipulate as few as 30. However, if you take a balance transfer card and delay the transfer at all, then you are losing out on the lower rate of interest.