Wednesday, 05 August 2015
Posted by Rebeccah Elley
While your credit card balance is probably the last thing you want to think about mid way through the work week, did you know you could potentially save yourself hundreds, even thousands of dollars by making the credit card switch?
It’s true. Aussies are paying a huge amount in credit card interest each year with current stats by Money Smart showing as a nation we are in $33 billion worth of credit card debt. Per cardholder that equates to $3,300.
If we do the maths using the $3,300 figure and your credit card has the average interest rate in our database of 17.61%, with a monthly repayment of $200 it will take you 1 year and 8 months to pay off and you will incur $506 in interest.
But if you switch to a competitive balance transfer deal like the Westpac Altitude Platinum that has a 0% BT offer for 20 months you will pay no interest and rid yourself of that debt in 1 year and 5 months - well within the balance transfer period.
So if you want to ditch your credit card debt with a BT card, just follow these 4 easy steps.
Head on over to our Switch & Save Calculator to compare over 100 credit card deals in the market today. All you need to do is select “Transfer an Existing Balance” and enter your current credit card details and our tool will show you how much you could save by switching to a new credit card provider.
Our comparison table allows you to select a few balance transfer offers that catch your eye and compare them side by side. Take into account the BT interest rate, balance transfer term, BT revert rate and annual fee when comparing deals, to ensure you choose the best balance transfer credit card for your situation.
Balance transfer offers are generally only available to new credit card customers, as providers use BT deals as a way of tempting cardholders to make the switch. So unless you hold other banking products with the provider, such as your bank account or home loan you will need to provide them with some details such as your Australian driver’s licence number, bank statements and employment details.
Once you’ve chosen a 0% balance transfer deal that ticks the boxes, you can kick off your application online by simply clicking on the blue provider link.
It’s one thing to find a great balance transfer deal but another to use it like a pro. Here are a few tips for farewelling your debt for good:
- Avoid spending on the BT card
While balance transfer cards come with competitive interest free periods, when it comes to making new purchases you will be charged the standard purchase rate, which as mentioned above are on average 17.61%.
Another thing to keep in mind is any new purchases have to be paid back first. So if you spend $400 on the card but are on a strict budget and can only afford to repay $200 a month, it will take you 2 months to pay off those new purchases and in that time you wouldn’t have slashed anything off the original debt.
- Don’t make cash withdrawals
This rule applies to all credit cards, as ATM withdrawals made with a credit card will face the hefty cash advance rate. Our database shows the average cash advance rate is 19.83%, so you can see why we advise cardholders to steer clear of cash withdrawals.
- Take note of the revert rate
Sadly all good things must come to an end, so make sure you create a budget that will ensure you’ve paid off your credit card debt before the balance transfer card rolls over to a higher purchase rate, or potentially the even higher cash advance rate.