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A balance transfer is when you transfer your credit card debt from your existing credit card(s) to a new card, usually because it offers you a special low interest rate (sometimes even 0% p.a.) for a set period.

The good news is that a balance transfer can be a great way to take control of your debt and get back on track. Read on to learn more about the basics of balance transfers.


How balance transfers work

Whether it’s an expensive time of year or you’ve just had a bit of a shopping splurge, it doesn’t take much for your credit card balance to creep up. And the longer you leave it, the harder it can be to get on top of. This is where balance transfers sometimes help.

Most credit cards give you the option to transfer balances from other credit cards or store cards. If you’re eligible, you simply need to ask your bank for a transfer, including the details of the old card, the new card and the amount you want to shift.

New cards sometimes come with a balance transfer offer that lets you pay low interest on the transferred balance for a number of months.

For example, instead of paying your current credit card rate (which can often be anything from 10-20% p.a. or more), you could pay as little as 0% p.a. for that time. This could save you heaps while you pay off your debt and give you an incentive to pay the balance down before the interest kicks in.


Choosing a balance transfer offer

When choosing a balance transfer offer, look at things like the special balance transfer interest rate and how many months it lasts for. Also pay attention to any balance transfer fees and the rate that will apply when the offer ends, as this will be substantially higher.

If you have more than one card, you may also want to find out how many card balances you can put on your new card and the total amount you can transfer. It’s worth knowing that some cards limit the balance transfer amount to 80% of your approved credit limit, which is something to be aware of if you were hoping to transfer more than this.

Remember that you’re signing up for more than just the balance transfer offer itself. It’s important to check the card’s interest rates, annual fee and other fees, as these will give you a better idea of the card’s overall cost.


Things to keep in mind

There’s no question about it – a balance transfer can sometimes be a really helpful way to tame that credit card debt. However, there are a few things you should be aware of before you sign on the dotted line:

  • Be sure of how long the special rate goes for and what it will be after the offer period ends (in some cases, an introductory rate as low as 0% p.a. may spike to 20% or more).
  • Don’t forget that the special balance transfer rate only applies to amounts you transfer to your new card, not to anything new you buy – this ‘purchase rate’ can be much higher.
  • Use the great balance transfer rate to get your debt in shape before the offer period ends. Be mindful of how you use your card from then on – resist the temptation to go on a spending spree.


Staying out of debt and in control

Getting on top of your debt is one thing, but how are you going to make sure you’re the boss of your balance from here? Planning out your repayments could be a good way to keep you on track. The St.George credit card repayment calculator is designed to help you understand how soon you could pay off your balance, so give it a go.

Keen for more tips? Learn more about the benefits and limitations of balance transfers

Credit criteria, fees and charges apply. Terms and conditions available on request. Switches, upgrades or customers accessing employee benefits are ineligible for balance transfer offers. Our balance transfer offers may be varied or withdrawn at any time and are not available in conjunction with any other promotion.