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 credit card
Bankwest Breeze MasterCard
0%
for 6 months
11.99% $59 $419
NAB gold card
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 credit card
HSBC
HSBC
0%
for 6 months
and then 21.99%
17.99% $0 $204
bankwest zero credit card
Bankwest
Zero
3.99%
for 9 months
17.99% $0 $201
virgin money no annual fee credit card
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 credit card
HSBC
HSBC
0%
for 6 months
and then 21.99%
17.99% $0 $160
Virgin money no annual fee credit card
Virgin Money
No Annual Fee Card
2.90%
for 6 months
and then 20.99%
18.99% $0 $134
bankwest zero platinum credit card
Bankwest
Zero Platinum
3.99%
for 9 months
17.99% $0 $124

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Top balance transfer cards to demolish debt was last modified: July 27, 2015 by Shaun Leung

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4 Comments - Write a Comment

  1. I am at my wits end with my credit card, I pay every month $150 but most of that seems to be interest. It feels like I pay $130 to the interest and $20 to the card, I wish I had used my head when I signed on with this mob all those years ago.
    Reading this email, I want to see if any bank would help out a retired carer (who pays her bills regularly) with a cheaper interest rate, is there any one who would help?

    Reply
  2. I agree with Elva Currie, I was employed for 2 years with an aged care company at Baulkham Hills when I took out 2 credit cards. one with HSCB another with American Express with a total of $6000. The interest is 21% and I have not been working for a year and am on unemployment benefits. I moved to Central Coast one year ago and thought I could get work no such luck so my credit cards are in the red, could you please help me

    Reply
    1. Mozo

      Hi Gwenda and Elva,

      Tackling credit card card will need time and dedication but as a first step, we suggest you talk with your current credit card provider. Explain your situation and ask them about options for switching to a lower rate card, or see if they can reduce the interest rate on your existing card for a set time so you can get top of your repayments.

      All the best with demolishing your debt demons!

      Team Mozo

      Reply

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