What are low rate balance transfers?

Nowadays many Australians have large credit card balances and are paying them off at the high rate that is often associated with credit cards. There can, however, be a solution for many in the form of a low rate balance transfer.

You take your existing high interest balance and move it to a new card that often carries a special rate. This rate will vary on the length of time needed to pay off the balance but it does provide temporary relief from incurring you present high interest penalties. The best way to find a good deal is by doing a balance transfer credit card comparison.

How do low rate balance transfers work?

These types of cards work in several different ways and the consumer needs to educate themselves a bit to find out which option will save them the most money. The key in doing this is being realistic about how fast you can pay off the debt.

The options

One of the most common options you see when conducting balance transfer credit card comparison is the 0% option. They key to this one is that it only stays at 0% for six month then it reverts to the current rate on the card, so this might only be your best option if you can pay it of in six months or you might find yourself at a higher rate than what you started at.

Then you have cards like St. George Vertigo MasterCard. While its 6 month transfer rate is higher, 2.99%, it only reverts to the purchase rate of 12.74% and that in most likely a better rate than you had.

Most cards do charge a transfer fee so if they do you should keep shopping for one that charges a lower fee. Make sure you do look at all the fees on the new card as the credit card companies must make their money somewhere.

Tips on shopping for a low transfer balance card

  • Of course, look for a low rate but keep in mind all the factors. Look at all the fees and rates that will apply to you and you will be in the top 6% of all Australians.
  • Be careful of transfer fees. If they are charging these they must be making a great offer to make it worth your while.
  • Check to see how long you have to make your transfer but why wait to save money? Also, many times the widow is opened from the time the account is opened. For example, if they offer 6 months at 0% and you make your transfer after 3 months then you will only have 3 months of the 0% left.
  • Check to see how your payments are used. Most of the time it is to pay off the cheapest debt first so try not to use the card. Most banks will not split the payment so everything you pay will be going toward the transfer till it is payed off or reverts to the purchase rate
  • Look at the annual fee. It will be rare not to get one but how much is it? A higher fee may not always be a bad deal. You must also factor in the saving you are getting by making the transfer.
  • You will not be able to transfer a balance from one card at a bank to another card at the same bank.
  • Even during a 0% window you will still have minimum payments that must be made.
  • THE BIGGEST TIP OF ALL Use the card just for the balance transfer and not to make more purchases. That negates the whole idea of the transfer to begin with. The low interest balance transfer should be helping you bring your budget under control.

To ensure yourself of the best deal possible do not forget to do your balance transfer credit card comparison.