Serious About Paying Off Your Credit Card?

Also known as a debt transfer, a Balance Transfer is when another bank* moves the balance from your old credit card to your new credit card, which has a lower interest rate.

(*You must be a new customer – you can't get a balance transfer with a bank you are already with.)

Choosing the best deal

To maximise the savings and pay the new credit card off as fast as possible, it’s usually best to choose a long, low interest-rate time limit - even if you don’t get the lowest transfer fee or annual fee. And you may be able to get a ‘life of balance’ deal: however long it takes you to pay the balance off in full, you will still get a low interest rate.

Note: You probably won’t get all the existing balance transferred - it’s usually 90-95% of the outstanding balance.

0% Interest

There are usually 0% offers: you pay 0% for a set period of time - e.g. 6 or 12 months, then after this the interest rate will be higher. While 0% may be tempting, it may still be better to choose a card with a long, low interest-rate time limit or ‘life of balance’ deal.

Balance Transfer for other types of cards

You may also be able to transfer the balance of other types of cards - e.g. store cards, Q Card. But check with the bank/s before you apply for a new credit card.

Fees & Minimum Monthly Payments

A one-off transfer fee might be charged (usually 1% or 2% of the balance being transferred), and an annual fee. And sometimes a condition of getting the new credit card, is that you will need to pay higher than usual minimum monthly payments.

If you don’t have good credit history, your credit rating (score) may be too low for your application/s to be accepted. If that happens, you could try approaching your existing bank to see if they have any other options to help you pay your credit card off faster.

After the Balance Transfer

Don’t add new debt to the new credit card

Any payments you make to your new credit card, will first go towards interest and charges, then to cash advances and purchases you have made with the new card. The balance that was transferred won’t start to be paid off until purchases or cash advances made with your new card, are paid in full.

You will be charged a higher interest rate for new purchases and cash advances, and with cash advances you are charged interest from the day you withdraw the money.

Get rid of your old credit card

Or at least lower the limit, then only use the card for emergencies, and pay the balance off in full every month.

Saving Up For Spending

Love My Money has online Journeys to help you get ahead financially and feel better about money. For example, ‘Saving Up for Spending’ – to help you plan ahead for things you want to buy (instead of using your credit card!).