A credit card balance transfer is when you move a debt from one or more cards over to a new card. This card will usually offer a lower introductory (or temporary) rate on the transferred amount.
Reduce your interest payments
Balance transfers can save you money in the short-term. How? Because the introductory rate on your new card is often lower which means you pay less interest.
But you need to find out what happens once the introductory rate period ends. What will the interest rate be? If you think you'll still have money owing, you'll need to do the sums to make sure you're not worse off overall.
Our balance transfer tool can help you here. Enter your existing debts and compare them against the interest on your potential new card. It'll give you an idea how much you’ll save during the balance transfer period.
Factor in fees
Once you’ve calculated how much you’ll save, you'll need to take other fees into account (such as annual fees). Sometimes there’s also a fee to do the balance transfer itself.
What are the conditions?
Balance transfers usually come with conditions as to what you can transfer, and to where. For example, you may not be able to do a balance transfer within the same bank; and you usually can’t pay out an overseas card.
With one of our cards, the introductory interest rate reverts to the standard purchase rate at the end of the introductory period. But with some other banks, it might revert to the cash advance rate (which is usually higher). Check with your bank to see what you'll end up paying.
Also, there’s usually a limit to how much you can transfer. We'll talk about this more in 5 things to consider about balance transfers.
Be selective when choosing a card
Whenever you apply for credit, it'll show up on your credit file. Of course, having records on your file isn’t always a bad thing. But the more credit applications you make, the more it might affect your future borrowing plans.
Don’t apply for everything. Be choosy—apply for the right card. Find out more about applying for a balance transfer.
Consolidate your debt
A balance transfer lets you merge your existing credit card debts into one. But if you have other debts too (like a personal loan), then a debt consolidation loan might be a better option.
Consider how long you think it’ll take for you to pay off your debts. Will it take you a few months? Typically, a credit card will offer a six or 12 month balance transfer rate. But if you think your debt might take years to pay off, then a debt consolidation loan could work better. Personal loans with a structured repayment plan— and loan terms of one to seven years—could be the go.