A credit card balance transfer involves transferring credit card debt from one card to another, with the latter card usually having a lower initial interest rate for a limited time. Credit card balance transfers with a 0% offer allow customers to pay off their debt interest-free for a limited time – assuming you actually manage to pay it all off in time and don’t make any new purchases (higher interest rates can apply afterwards and for new purchases). It’s also worth considering any annual fee that applies, plus the interest rate the card reverts to after the interest-free period.
At the time of writing there are 89 credit cards on Canstar’s database that offer a 0% introductory balance transfer rate.
0% balance transfer offers available
The table below displays a snapshot of 10 low-rate credit cards with 0% balance transfer offers, with links to providers’ websites. These results are sorted by the length of the 0% balance transfer period (longest to shortest), then provider name (alphabetically).
What is a 0% balance transfer?
The balance transfer interest rate is the introductory rate charged when you transfer your balance to a new credit card. This introductory rate typically lasts between 6-24 months. So, for example, with a 12 month 0% balance transfer, you will pay 0% interest on your existing credit card debts for 12 months.
In addition to having a low or 0% interest rate for a period of time, a balance transfer can also be a good way to consolidate your credit card debts. By paying a one-off balance transfer fee, you could move all of your existing credit card debt from multiple cards onto one.
However, you need to be aware of the revert rate – the rate your card will revert to once the introductory period finishes. It can also apply to new purchases made on the card. According to Canstar’s database, these revert rates can be as high as 25.99%. If you don’t pay off your transferred debts by the end of the introductory period, then what’s left will be charged interest at this higher rate. If you don’t think you can pay it all off in time, consider picking a card with a lower revert rate.
Is the balance transfer rate all you need to consider?
A card with a 0% balance transfer offer might not necessarily offer better value than one with a higher rate. An interest-free card with a high annual fee could actually end up being more expensive over the long-term than a card with a low-rate and no annual fee. The table below shows an example of how fees and interest-rates can make a big difference to your repayments.
Cost of repayment for $5,000 debt
|Card condition||Annual fee||Revert||Time to repay||Total cost|
|0% for 24 months||$200||21.75%||2 years, 5 months||$5,638|
|0% for 12 months||Nil||19.99%||2 years, 3 months||$5,354|
|No interest-free period||$36||7.99%||2 years, 5 months||$5,607|
Source: canstar.com.au. Based on a repayment of $200 per month on a starting debt of $5,000.
A high annual fee combined with a balance transfer fee of around 3% can end up wiping out the benefits of a balance transfer if you aren’t careful, so try, if possible, to look for the holy grail of balance transfers – a card with a 0% balance transfer rate and no annual fees.
The table below shows a snapshot of 0% balance transfer offers with $0 annual fees on Canstar’s database, with links to providers’ websites. These results are sorted by the length of the 0% balance transfer period (longest to shortest), then provider name (alphabetically).
When taking out a balance transfer, it’s a good idea to focus primarily on paying off as much of your debt as possible before making any new purchases with your card. Many people have found success in paying off their debts by cancelling their previous credit cards or leaving it locked away, to reduce their temptation to spend.
Failing to repay your debts on a balance transfer deal can keep you on that vicious cycle of debt for even longer, so make you sure you compare your options thoroughly before deciding.
You can also learn more about balance transfers by checking out the following articles: