Can you keep taking out balance transfer card after balance transfer card, moving to another card when the 0% offer on the previous card expires? This article explains that to a certain extent, you can – but it may not be a good idea.
Can I get back-to-back balance transfers?
Yes, you can, but not endlessly. Back-to-back balance transfers may negatively affect your credit rating, and eventually you may find that you are rejected for future balance transfers.
Disadvantages of back-to-back balance transfers
Back-to-back balance transfers negatively affect your credit rating in the following cases:
- If you make back-to-back balance transfers because you are unable to repay your debt by the end of the promotional period
- If you apply for a balance transfer and are rejected
- If you apply for multiple balance transfer cards
- If your debt increases because you are unable to meet the regular minimum repayments and do not repay your balance by the end of the introductory promotional period
- If you do not close your old credit card account after transferring your balance to a new card, and do not repay the debt on both credit cards
Balance transfers also have multiple costs involved:
- There is a balance transfer fee of up to 3% of the amount being transferred.
- The annual fee on balance transfer cards can be up to $700/year, on top of the usual fees that apply to balance transfers and other credit cards.
- If you make any additional purchases on the balance transfer card, these will accrue interest charges from the day of purchase.
- If you don’t manage to repay the debt before the 0% introductory interest rate expires, the revert rate that applies thereafter can be much higher.
Other options for repaying credit card debt
A balance transfer is just one of the many options for consolidating and repaying your credit card debt, and for it to be a good idea, you would need to repay your debt within the introductory period. Other options include:
|A personal loan, where you have a set timeframe to repay the debt and you have to repay a set amount each month, so you can budget for the payments.|
|Add it to your mortgage – although this can be a more expensive option in the long run, in terms of how much interest you pay on the debt.|
|Talk to your lenders about a repayment plan.|
For those who are struggling to repay credit card debt, we recommend speaking with a free financial counsellor. This is not to be confused with a debt consolidation company, who charge a fee and will not help you with your larger budgeting situation.
Try our Budget Planner Calculator to work out an estimate of what you could afford to repay towards your debts each month, taking into account the need to pay your rent or mortgage and buy groceries and fuel:
If you think a balance transfer is still the way to go, compare your options on our website or check out our list of balance transfers on offer in 2016.
Learn more about Credit Cards