Top balance transfer cards to demolish debt

Did you binge on Christmas shopping last year, only to freak out at the huge credit card bill that arrived this month? You’re not alone. Thousands of Aussies often find themselves struggling with a post-Christmas debt hangover that causes all sorts of financial headaches during the new year.

But you can quickly destroy credit card debt with the help of a balance transfer credit card. By moving the balance on your old credit card to a low interest balance transfer card, you can lop off large amounts of debt during an intensive few months, and save big on interest payments in the long run.

To make this work, you’ll need to figure out how long it’s going to take to pay off the debt completely, and must not make new purchases on your balance transfer card. Why? New credit card rules have come into play which means that repayments must go to the highest interest earning debt first. If you keep putting new debt on the card, you could find yourself at the end of the balance transfer period paying a higher interest rate than your old card.

So which balance transfer credit card should you choose? To answer this, we used an average credit card balance of $3000, and compared this with an average credit card (17.25% interest rate with no annual fee). Using our trusty health check tool, we ran 3 common repayment scenarios to find out which balance transfer credit card will help you reach debt-freedom the fastest.

Scenario 1 – $100 monthly repayments

Making minimum monthly repayments means it’ll take you three years and 4 months, and cost $954 in interest and fees to pay off your debt. But you can save a small fortune in interest if you choose a card with a low balance transfer rate that lasts for 6 months or more. Some top deals right now include:

Credit Card	Balance Transfer Rate	Interest Rate	Annual Fee	Savings in fees and interest
Bankwest Breeze	0% for 6 months	11.99%	$59	$419
NAB Gold Card	1.00% for 12 months	19.49%	$90	$302
HSBC HSBC	0% for 6 months and then 21.99%	17.99%	$0	$163

Scenario 2 – $300 monthly repayments

Spending a few hundreds dollars more on your monthly repayments means it’ll take you 11 months and $262 in fees and interest to achieve debt-freedom. Since it’ll take less than a year to tackle your debt, choose a card with no annual fee:

Credit Card	Balance Transfer Rate	Interest Rate	Annual Fee	Savings in fees and interest
HSBC HSBC	0% for 6 months and then 21.99%	17.99%	$0	$204
Bankwest Zero	3.99% for 9 months	17.99%	$0	$201
Virgin Money No Annual Fee Card	2.90% for 6 months and then 20.99%	18.99%	$0	$171

Scenario 3 – $500 monthly repayments

Going all out on your repayments means you’ll clear your balance in 7 months time, and spend only $160 on interest and fees. But you can knock down debt in 6 months and reduce your payments even further by choosing a card with a 0% balance transfer rate, or one with no annual fee:

Credit Card	Balance Transfer Rate	Interest Rate	Annual Fee	Savings in fees and interest
HSBC HSBC	0% for 6 months and then 21.99%	17.99%	$0	$160
Virgin Money No Annual Fee Card	2.90% for 6 months and then 20.99%	18.99%	$0	$134
Bankwest Zero Platinum	3.99% for 9 months	17.99%	$0	$124

Shaun Leung

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