If steep credit card interest repayments on your Christmas spend have got you feeling down, try Mozo’s Balance Transfer credit card cure – it’s easier than you think.
Is a balance transfer worth the effort?
Based on a typical outstanding credit card balance of $4,400, chances are you’ll be shelling out well-over $700 in interest over the next 12 months. A balance transfer allows you to keep that cash for yourself and put it towards getting out of debt faster. Where else can you put $700 back in your pocket in the same time it takes to choose a few lotto numbers?
6 steps to smash credit card debt in 2014
1. Assess the damage
Dig out your latest statement and work out realistically, how much you can put towards your credit card bill each month and how long it’s going to take you to repay it. Ignore minimum repayments (1 in 2 cards are designed to keep you in debt forever) so rather, set your own repayment plan.
2. Choose a really competitive balance transfer product
There are four things to look for in a good balance transfer card:
- • Low annual fee
- • Long Balance Transfer period (12 months is a good length)
- • Low Balance Transfer interest rate
- • No Balance transfer fee
You’ll also want to make a note of the reversion rate you’ll pay after the honey moon period runs out – some revert to cash advance rates well over 20% which is good incentive to switch again if you haven’t paid down the full balance in the 0% honeymoon period – so put the date in your diary!
It’s really prime hunting season for balance transfers so there are some sweet pickings if you know what you’re looking for.
Got a large debt to bring down to size?
If you’re feeling in over your head and shelling out a small fortune in interest repayments, a good option in the market right now is an NAB low rate card with a market leading 0% balance transfer for 15 months. For large outstanding balances the $59 annual fee is well worth the investment and 15 months is a fair amount of time to get that debt down to size.
Just want to tidy up a small outstanding balance?
If you just need a quick reprieve from interest repayments and are positive you can get your balance down to zero in 6 months or less, The HSBC Credit Card could be just what the doctor ordered. As the name suggests, there’s no annual fee on the card and you’ll pay 0% interest on balance transfers for 6 months. This is a good card to bring down the interest costs of a little Christmas splurge but make sure to pay off the balance within 6 months or risk facing the standard cash rate of 21.99%!
A card that’s for keeps
If you have a sizeable Christmas tab to pay off but are also looking for a new card that stays in your wallet after the honeymoon, Bankwest Breeze MasterCard is the way to go. A 0% for 13 months balance transfer offer will give you the breathing space you need with a low $59 annual fee. It also has one of the lowest ongoing purchase rates amongst the balance transfer cards at 11.99% but do make sure your balance is at zero before you start spending again.
Want to see all the options? Compare balance transfer cards here.
Once you’ve chosen the right product fill out the application form online, if you have your credit card statement handy it should only take a few minutes.
4. Don’t spend on the card
As a rule, balance transfer cards are a one trick pony and are only good for reducing the interest you pay on an existing debt. Most of them shouldn’t be used for spending (especially if there is still a balance on the card.) Balance Transfer cards usually come with a high interest rate on purchases and nasty little clause that says ‘no interest free days on outstanding balance’ which means they’ll charge you interest from the second you purchase anything. Just make a note in your diary of when the honeymoon runs out, cut it in half and leave it in a drawer.
5. Automate repayments
Automate payments to come straight out of your bank each paycheck and then forget about it. Start with some quick math – for example if you’re around $2,400 in the red thanks to the price of that gourmet-turducken and top of the line gadgets that santa brought for the kids, you’ll need to put aside $200 per month to be debt free in 12 months.
The discipline of setting aside money at the start of each pay cycle will help keep you out of the debt cycle forever and also come in handy when you’re ready to save for something you really want, like an overseas holiday or your own home.
6. Honey moon over and still in debt? Switch again!
At the end of the balance transfer period assess how far you’ve come. If your balance is down to zero, give yourself a pat on the back and call your provider to close the account. If there’s still a fair bit owing (don’t worry, we’re all human) just switch again and keep at it!