Balance transfer cards explained, at last

By Mozo ·

If you’ve racked up a bit of debt on your current plastic, don’t worry it happens to the best of us. According to Mozo estimates, the average Australian credit card holder with debt has a balance of about $4,200.*

Rather than trying to pay your debt back on your current card, another option is to transfer that balance over to a new credit card with a competitive balance transfer offer. That brings us to the important question of…

What is a balance transfer card?

Credit card providers are constantly looking to gain new customers and one way they do this is by introducing competitive balance transfer deals at times of year when people are likely to be looking at paying off debt e.g post Christmas.

An important thing to remember is while a credit card may advertise a 0% balance transfer deal, the offer is only available for a honeymoon period, which can range anywhere from 3 months up to 26 months.

If you take advantage of one of these offers, your balance will roll over from your existing credit card to the new BT card. While the provider’s aim is to get you as a new customer, if you’re thrifty your goal should be to take advantage of the interest free period and use the BT card to pay off your debt before the honeymoon period comes to an end.

How is my balance moved across?

The process of moving your balance across from your current credit card to the new card is pretty simple. When you apply you’ll be asked for the name of the bank that your current credit card is held with and the card number. If you’re approved the provider will pay out your old card to $0 and roll it over to the new card. 

Just be sure to cancel your old plastic as soon as the balance is transferred, as otherwise that old credit card could keep leaving a dent in your bank account, as it'll continue to charge you any ongoing fees or penalties that may apply. 

Balance transfer credit card comparisons - last updated November 24, 2020

Search promoted credit cards below or do a full Mozo database search. Advertiser disclosure.

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  • Thumbnail icon for St.George
    St.George Vertigo

    0% p.a. for 22 months and then 21.49% p.a. (1.50% balance transfer fee)

    0% p.a. for 7 months then 13.99% p.a.

    $55 $0 in the first year


  • Hot DealLimited time balance transfer offer

    Thumbnail icon for Westpac
    Westpac Low Rate

    0% p.a. for 24 months and then 21.49% p.a. (1.00% balance transfer fee)

    13.74% p.a.



  • Thumbnail icon for CUA
    CUA Low Rate Credit Card

    0% p.a. for 20 months and then 21.74% p.a.

    11.99% p.a.

    $49 $0 in the first year


  • Thumbnail icon for ANZ
    ANZ First

    0% p.a. for 18 months and then 20.24% p.a. (2.00% balance transfer fee)

    20.24% p.a.



  • Apply ByFebruary 24, 2021

    Thumbnail icon for Qantas Money
    Qantas Money Qantas Premier Platinum

    0% p.a. for 18 months and then 21.99% p.a. (1.00% balance transfer fee)

    19.99% p.a.

    $299 $199 in the first year

    Qantas Frequent Flyer


How much debt can I transfer?

Generally the new card provider will only allow you to transfer up to 80% of the credit card limit. This means if you have a debt of $4,000 which you want to transfer, you will need to get approved for a new credit card limit of $5,000.

Are there any hidden fees?

You might be tempted to switch credit cards thanks to an enticing 0% balance transfer headline rate but keep in mind some card providers have balance transfer handling fees which can be anywhere between 1-3% of the balance you’re transferring.

Scenario: To keep things consistent, let’s use the average balance of $4,200.* If you transferred that over to a card with a 1% handling fee that will cost you $42. In general these handling fees are found with longer term BT deals e.g between 18 and 26 months. So if you know you can pay off your debt over a shorter timeframe, you’ll be better off going with an interest free BT deal with no balance transfer handling fees.

What are the benefits of a balance transfer card?

The savings. You could potentially save hundreds of dollars over a year by moving your debt over to a 0% deal. 

Scenario: Say you have a credit card with an average balance of $4,200* and the average rate of 17.10%**. If that balance was rolled across to a card with a 0% balance transfer deal for 12 months, you would save $398 in interest. But that’s only if you use the balance transfer card the right way, as there are some common pitfalls to avoid…

What are the traps of a balance transfer card?

While a BT credit card can be a helpful product to pay down debt, here are some of the things to steer clear of:

  • Applying for multiple balance transfer deals. Did you know every time you apply for a credit card it leaves a footprint on your credit report? So it’s a wise idea to check what your credit score is before you apply to ensure you’re in a good position to be approved. The Australian Government lists some of the websites that allow you to download a copy of your credit report here.
  • Failing to make a repayment budget. It might be tempting to only pay the minimum repayment amount each month but this will mean your debt is still hanging around when the BT honeymoon period ends. In other words, that 0% interest rate will revert to the higher ongoing purchase rate that we mentioned above is on average 17.10%**. So take the time to work out how much you’ll need to pay each month to blast the debt within the BT period. For instance, say you take out a card with a 0% balance transfer deal for 12 months, if you have the average balance of $4,200* you would need to make a monthly payment of $384 to pay off the debt before the BT period comes to an end.
  • Spending on the balance transfer card. You might think when you receive the new plastic in your pocket, it’s time to put it to good use but this will only mean it will take you longer to pay off your debt. The reason is because any new purchases have to be paid off first and you’ll also incur the higher purchase rate. So if you’ve worked out you need to pay $380 a month to pay off your debt before the balance transfer period comes to an end but then rack up $200 on the new card, that month you will have only paid off $180 of your original debt.
  • Withdrawing cash from an ATM. This is a trap that you should avoid when it comes to any credit card. There are two main problems with making cash withdrawals that could see you slip further into debt. Firstly you’ll be charged the cash advance rate which is notoriously high often reaching 20% and over. Secondly, the interest free days don’t apply to cash withdrawals, so you’ll incur interest from the day you withdraw from the ATM.
  • Falling back into old habits. After all that hard work ridding yourself of debt, stay on track by creating a budget to ensure you’re only spending what you can afford to pay back. Also make sure you pay the balance in full and on time each month to avoid the bite of interest and late payment fees. We recommend setting up a direct debit from your bank account to your credit card provider to ensure you never miss a payment.

How do I compare balance transfer cards?

On Mozo of course. We have two helpful ways you can track down a BT deal that suits you: 

  1. In our balance transfer hub: This section is specifically dedicated to showcasing some great BT offers available in the market now. If you see one you like simply click on the ‘go to site’ button and you’ll be taken to the card provider’s application page.
  2. Punching your numbers into our Switch & Save Calculator: Alternatively you can use our switching tool where you can type in your current details to find out how much you could save by switching to a low rate deal.

*Mozo estimates, as of 29 January 2020, based on RBA monthly credit card statistics and ASIC's Credit Card Lending in Australia report.

**Average purchase rate for all personal credit cards is 17.10%, as of 29 January 2020.

^See information about the Mozo Experts Choice Credit Cards Awards

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