balance transfer guide 2009

8/8/2019 Balance Transfer Guide 2009

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The Ultimate Guide to Balance Transfers in Australia

This guide will educate you on how to cut your interest repayments significantly, without

having to pay fees elsewhere to compensate.

How does the concept of moving a $8,000 credit card balance over to a new credit card

and pay it off at a low 2.9% p.a. sit with you?

Better yet, how does 0% p.a. sound?

If you're unfamiliar with balance transfers, you may be thinking, 'This sounds too good

to be true'.

Yes, there is fine print. Yes, there are catches. Yes, there are methods to avoid them all

and be the ultimate winner when it comes to credit card savings.

Frequently asked questions about balance transfers include:

- I'm not sure what a balance transfer is yet, but I'm keen to find out as I heard they can

save me a mountain of money. Is it the real deal or just hype?

- I've done the odd balance transfer in the past. How I can further maximise my

savings from future balance transfers?

- I live and breathe balance transfers. How can I make sure that I'm doing everything

right?



- I've been stung badly in the past from balance transfers. How can I avoid getting

stung from balance transfer offers?.

- I'm after a comparison of the leading balance transfer cards Australian banks have to

offer. What's the best balance transfer offer for my current credit card scenario?

All these questions will be answered through the course of this book.

After reading this e-book, you will become the banks most feared customer:

An educated consumer who knows the in's and out's of their financial product.

Banks prey on a combination of basic human traits when it comes to credit cards and

balance transfers are no exceptions.

Confusion, ignorance, a general lack of understanding and unclear terms and

conditions don't help Aussie consumers who just want to cut their interest repayments

in whatever way possible.

Follow this guide carefully and you'll never have to pay over high interest rates againwith only discipline and education on your side.

Since the banks won't go out of their way to teach you how to maximise your balance

transfer savings ... Credit Card Finder will instead.

If you have any comments, suggestions or feedback please contact us at

[email protected].



Table of Contents:

1.0 An Introduction to Balance Transfers

1.1 So what Exactly is a 'Balance Transfer'?

1.2 Why Would a Bank Allow their Customers Balance to Transfer to a Competitor?

1.3 What are the Requirements for a Balance Transfer?

1.4 How do I apply for a Balance Transfer?

1.5 The Balance Transfer Process

1.6 Tips for Balance Transfer Application Approval

1.7 How to Choose a Balance Transfer

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2.0 Balance Transfers - What's the Catch?

2.1 How do Some Succeed where Others Fail?

2.2 How Balance Transfers can Potentially Affect your Credit Rating

----

3.0 The Different Types of Balance Transfers

3.1 0% p.a. for 6 month

3.2 2.9% p.a. for 12 month

3.3 4.9% p.a. for life

3.4 Other



4.0 How much Money can I save Undertaking a Balance Transfer?

4.1 Balance Transfer Calculator

4.2 Balance Transfer Scenario and Case Study

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5.0 What are the Best Balance Transfer Credit Cards?

5.1 Comparison of Leading Australian Balance Transfer Credit Cards

----

6.0 Didn't Find What You Were Looking For?

6.1 Resouces

----



1.0 An Introduction to Balance Transfers

1.1 So what exactly is a 'balance transfer'?

A balance transfer allows you to transfer your current credit card balance over to a new

credit card, and repay it at a much lower interest rate.

You cannot transfer a balance from one bank credit card to a different credit card under

the same bank.

For example, you couldn't transfer your Citibank credit card balance to another Citibank

credit card.

You could however, transfer your Citibank credit card balance to a NAB credit card.

1.2 Why would a bank allow their customer's balance to be transferred to a

competing banks?

People often have difficulty wrapping their heads around the concept of a balance

transfer because they don't understand what the bank has to gain out of it.

In the short term, Bank A loses the potential interest revenue from their customer

repaying the full standard interest rate on the credit card.

However in the long term, by allowing balance transfers across all different banks, it

gives consumers false confidence in lower rates, ultimately creating more revenue from

interest and fees.

1.3 What are the Requirements for a Balance Transfer?

Simply put, you'll need an above average credit score to be eligible for a balance

transfer on your new credit card application.

Providers tend to prefer large balances to be transferred over as well, although there is

no strict figure or guideline as to what this figure is.



1.4 How do I apply for a Balance Transfer?

There are several ways to apply for a balance transfer:

Online application: If the credit card you are applying for online has a balance transfer

offer, then you can input your credit card balance details on the form and your bank will

sort out the transfer.

Bank branch: You may go to your bank directly and apply for a credit card balance

transfer.

Over the phone: You may request a balance transfer on your credit card application if

you choose to apply via phone.

Via mail: For some, pesky credit card applications come non-stop in the mail, and

usually straight into the bin. However if the mail offer has a balance transfer offer on the

credit card, you can apply through this method as well.

1.5 The Balance Transfer ProcessBalance transfers are the saving grace of cutting interest repayments on credit cards.

While most Australian’s have a basic concept of what a balance transfer is, many are

actually clueless on how to apply for a balance transfer and how the application is

processed.

-

-

What Fees and Charges do I have to Pay?

In order to carry out a balance transfer, you’ll need to apply and receive the new credit card

with the BT offer on it. This implies that you’ll have to pay the upfront annual fee on the new

card, which can range anywhere from $40-$200+.

-



In the U.S and U.K, you often have to pay a 1-3% balance transfer* fee of the amount

you’re transferring.

This does not exist in Australia (in most cases) - it is likely covered by the bank who you are

transferring to.

Therefore if you performed a balance transfer from Bank A to Bank B, Bank B would likely

pay a small percentage fee to Bank A.

*The ANZ Balance Visa has a 1% balance transfer fee.

-

What are the Limits?

Most Australian banks will allow you to transfer up to 95% of your current credit limit,

usually with a minimum of $100-300.

For example if your credit limit on Card A is $5000, and you have a balance of $6000

on Card B, you will only be able to transfer $4750 or balance from Card B>Card A.

-

Most issuers will only allow you to transfer balances from a different provider as well, i.e you

could not transfer your balance from your first NAB credit card to another NAB card.

-

Often you’re allowed to go over 95%, but a fee will be imposed. This fee can potentially be

so high that the balance transfer may actually cost you more than save, so be wary.

-

What happens to the credit card which I transfer the balance from?

Nothing. You can either keep it open or cancel it as you wish.

How do I apply for a balance transfer?

State that you wish to transfer a balance on your application form.

Call your bank and follow the prompts, or ask to speak with somebody who can carry out

your balance transfer.

Apply for a balance transfer online at your bank’s website or visit the bank branch

directly



What do I need to provide for my application?

It’s a very short process. Generally you’ll only be asked for:

The original card issuer of the credit card you wish to transfer your balance from

(Commonwealth Bank, GE Money, etc.)

Your credit card account number.

The amount you would like transferred.

-

How long will my application take to process?

It varies. Aussie will process your application on the same day if you apply online, while

St George can take up to 14 days. You’ll need to check or ask your provider.

What are some of the top balance transfer offers available in Australia?

0% p.a. balance transfer offers tend to be the most popular, since you can effectively

pay no interest for the entire 6 month term.

Click through for the top 0% p.a. for 6 months balance transfer offers .

1.6 Tips for Balance Transfer Application Approval

If your application is rejected, wait at least 2 weeks until you apply for another credit

card. Most banks have automated rejection for applicants who have been rejected

elsewhere within 2 weeks.

Ensure you have a decent credit rating. Have you paid off the majority of your

repayments on time? If you aren't sure, check your credit score with veda .

Below is a short article on long term balance transfer requirements, also known as 'for

life' or 'permanent' balance transfers.

While it is targeted towards long term transfers, the rules and suggestions can be taken

to heart for any type of credit card balance transfer.

http://www.creditcardfinder.com.au/0-for-6-month-balance-transfer-offers

http://www.mycreditfile.com.au/home/home_default.aspx

http://www.mycreditfile.com.au/home/home_default.aspx




Long Term Balance Transfer Approval Requirements

When it comes down to long term balance transfers, also known as ‘for life’ or ‘permanent’

balance transfer offers, approval comes down to more than a positive credit history. Over

the past month, we have received a few comments on these category of balance transfers

and how difficult it can be for approval:

Patricia wrote: “The whole for life balance transfer and the offer for 4.9% is a joke.

They didn’t give it to me even though I qualified. It’s better for them to give that money as a

loan and get more profit rather than accepting applications for balance transfer credit cards.

Or maybe they don’t even have the money to support their product .”

Kim wrote: “I applied for a 7.9 balance for life and was declined for no apparent reason,

They did not even do a employment and salary check with payroll. This is a huge time

waster,they will take days to give you a response and the customer service number is

overseas. You do not get to talk to anyone ever in Australia. It looks to good too be true

cause it is.”

What are the Possible Reasons They are Being Rejected?

Ultimately, credit card providers willing to enter a ‘for life’ balance transfer deal will want

to restrict their offers to customers who will potentially bring them the most revenue.

They’ll be seeking to accept people with the specific features:

Australian citizens on high-earning salaries.

A history of consistent debt repayment.

A large balance to transfer over - this will increase the chance that you will make

purchases on top of your transferred balance, prolonging the life of your balancerepayment.



What if I don't qualify for these?

These stricter requirements tend to only apply to 'for life' balance transfer offers. You

can still be easily eligible for regular balance transfers if you do not meet all of them.

If you believe a balance transfer credit card isn't right for you or you doubt your chances

of being approved, stick to a low interest rate credit card to pay the lowest on your

repayments.

See a comparison of the lowest interest rate credit cards here .

What are the key things to remember about a balance transfer?

Balance transfer requests will not be processed if the transfer amount is

from another credit card of the same branch (i.e Citibank to Citibank)

from a Credit Card not issued in Australia

less than $500 in most cases

or, will be more than 95% of your available credit limit

and, your card account is not in good order.

1.7 How to Choose a Balance Transfer

Have you got a good credit history?

A good credit score will give you a much better chance to get a

Balance Transfer

If your credit score isn’t good, the likelihood is you’ll either be offered

a much worse rate than advertised, or be rejected.

If you’re commonly rejected for new credit, a balance transfer

unfortunately will unlikely work for you.

http://www.creditcardfinder.com.au/low-interest-rate-credit-cards

http://www.creditcardfinder.com.au/low-interest-rate-credit-cards



Are you able to payoff your debt within 6 months?

You have 2 options

1. Get more time to payoff debt - Consider a longer term life time

balance transfer or perhaps a 12 months balance transfer to give

yourself more time to payoff the debt

2. Switch more than once - If your credit rating is good enough

you can consider retransferring your balance transfer after the

1st 6 month deal is finished.

This way you can buy yourself enough time to payoff your debt.

You need to be careful with this as it will require careful

management of your cards and you will need a very strong credit

rating.

Recommended Deals

- 12 month balance transfer offers

- Lifetime balance transfer offers

- 6 month balance transfer offers

Take advantage of the 0% 6 months balance transfer offers Since you can

payoff your debt in 6 months it would be wise to use a 6 month offer. These usually

come with lower annual fees and allow you to revert to a lower purchase rate if you

want to continue to use the card after the balance transfer is over.

Recommended Deals:

0% p.a. for 6 month balance transfers.


http://www.creditcardfinder.com.au/for-life-balance-transfer-offers









While not all balance transfer offers will revert to the cash advance rate, most will at

least revert to the standard rate of purchases.

Lesson: Only undertake a balance transfer if you are positive you can repay at least

80% of it in the balance transfer period.

Case 2: Sarah has transferred her balance of $3000 over to a 2.9% p.a. for 12 month

balance transfer credit card. Throughout the year, she's made $2000 of purchases on

her credit card, and managed to pay off $2500 of her balance in total.

She figures that even though she's been spending more on her balance transfer card,

she's at least paid off her cheap 2.9% balance.

Wrong: When you make a purchase on a credit card which has a transferred balance

on it, the purchase essentiall becomes 'locked in' until you repay the amount.

For example, If she made a $500 purchase on top of her $3000 transferred balance,

and repaid $600 of her credit card, she would have repaid the purchase along with

$100 of her balance transfer amount.

You cannot choose which balance you wish to repay first (transferred or purchase).

Providers do this in order to prolong the transferred balance in hope that the balance

transfer period will expire, and the consumer will be left with a high interest balance to

repay.

Therefore, after 12 months, Sarah is left with a $2500 balance which has not only

accumulated 2.9% of interest, but will revert to the credit cards standard interest rate.

Lesson: If you need to make purchases, do it on another low interest rate credit card.

Consumers tend to think it's the 'responsible choice' to close their old credit card

account in order to 'cut down on their credit cards' but in actual fact if you have to

continue using credit, use your old credit card for purchases.



Case 3: Ashley hates repaying interest on his balances. He recently learnt of balance

transfers and loves the concept of repaying 0% p.a. on his credit cards.

Ashley juggles his $10,000 credit card balance among different 0% p.a. cards.

He transfers once, repays $1000 of the 6 month period, then continues to juggle his

balance among more 0% p.a. for 6 month offers.

Ashley figures that he'll eventually get around to paying it all off, and he won't have to

pay a cent of interest.

Wrong: In theory, this strategy is very plausible. However, there are other factors to

take into account.

Although Ashley's interest repayments will be nil, he has to pay a $50-100 fee from the

credit card's annual fee on each transfer every 6 months.

Also, constantly applying for new credit can be potentially damaging to your credit

rating. You never know when you may be unexpectedly rejected from a credit

application, and it can hurt your pockets quite severly.

If Ashley were to be rejected from a new credit card application, then he may not be

financially stable or prepared to carry a large and expensive credit card balance.

Lesson: Take it easy on balance transfers. If you're repaying on time and have an

excellent credit history, you generally have nothing to worry about.

Some key factors to take into account when constantly swapping balance transfer deals

is the concept of debt percentage.



2.2 A Determining Factor of your Credit Rating: Debt Percentage

The main issue regarding balance transfers affecting your credit score is the concept of

‘debt percentage’.

This is essentially how much you owe on your balance, in relation to your credit limit. If

you currently own one credit card with a credit limit of $4000, and your balance is

$2000, your debt percentage is 50%.

While there are no specific guidelines as to what debt percentage is acceptable, or at

which point it starts becoming a detriment.

If you undertake a balance transfer of your $2000 balance to another credit card with a

limit of $3000, your debt percentage has become 66%, even though you owe the same

amount.

Balance transfers can also work in your favour for your credit score. If you transferred to

a card with a limit of $10,000, your debt percentage would be 20%.

Therefore, your credit score is subjective to change either positively, negatively or

neutrally, depending on your change in debt percentage.

The advantage of paying off little to nothing on your interest repayments after a balance

transfer however, outweighs the effect on your credit card rating.

Just keep in mind your debt percentage if you are frequently undertaking balance

transfers.

Can't I simply apply for more credit to increase to improve my debt percentage?

If you need a fast boost of credit rating, this is certainly not a quick fix.

Credit score generally takes months if not years to improve, and in the short term, applying

for more and more credit may even damage your overall credit.



3.0 The Different Types of Balance Transfers

3.1 0% p.a. for 6 month

This is the most popular form of balance transfer in Australia, due to the appeal of paying '0% interest'.

While you'll still have to pay the upfront annual fee of the new credit card you're

planning to transfer to, repaying a balance at 0% for 6 months will save you a hoard of

money.

3.2 2.9% p.a. for 12 month

For the consumer who needs a little longer than 6 months to repay their credit card

balance, and won't mind paying 2.9% p.a. for it.

3.3 4.9% p.a. for life

For consumers who need years to repay their balance. It's important to note that 'for life'

balance transfer cards have high annual fees as they usually come from Platinum credit

cards. This also means you will need to ear over $60,000 to be considered for approval.

Otherwise, repaying 4.9% p.a. is much cheaper in the long term than carrying a balance

repaying ~19.99% p.a.

3.4 Other

Other offers include 4.99% p.a for 12 months, 2.99% p.a for 6 months, 7.99% for 6

months, and 7.9% p.a. for life.

There are no strict figures or limits for balance transfer offers, 3.1 3.2 and 3.3 are

simply the most popular and valuable forms of balanc transfers.



4.0 How Much Money Can I Save Undertaking a Balance

Transfer?

Not taking into account annual fee costs, some comparisons of different BT offers using

the same rates and balances:

0% for 6 months:

$5000 at 18% interest, paid off over 6 months: $450

$5000 at 0% interest, paid off after 6 months: $0

2.9% for 12 months:

$5000 at 18% interest, paid off over 12 months: $900

$5000 at 2.9% interest, paid off over 12 months: $145

4.9% for Life (3 year scenario):

$10,000 at 18% interest, paid off over 36 months: $5400

$10,000 at 4.9% interest, paid off over 36 months: $1470

4.1 Balance Transfer Calculator

Use our free balance transfer calculator to calculate the amount of savings you can

earn by undertaking a balance transfer.

Click here to see and use our free balance transfer calculator.

http://www.creditcardfinder.com.au/credit-card-balance-transfer-calculator




4.2 Balance Transfer Scenario and Case Study

Jane has 2 credit cards. They feature:

Card #1 - A balance of $2533 and an interest rate of 17.99% p.a.

Card #2 - A balance of $3320 and an interest rate of 16.99% p.a.

To cut down on her interest repayments, Jane decides to carry out a balance transfer in

order to repay the minimum possible. A 0% for 6 month offer isn’t long enough for her to

repay the debt, so she decides to undertake a 2.9% for 12 month transfer with the Citibank

Silver Credit Card .

Her input into the balance transfer calculator would look like this:

-

Jane's Balance Transfer Input

The ‘regular interest rate’ and ‘annual fee’ are of the credit card you plan to make the

transfer to. After the inputs have been made and Jane presses ‘Calculate’, she gets her

results:-

http://www.creditcardfinder.com.au/citibank-silver-credit-card-details-and-application.html






Jane's Balance Transfer Results

The first bar is how much interest Jane would have paid by taking 12 months to pay off her

2 original balances.

The second column is how much she spent in interest on her balance transfer card,including the cost of the annual fee.

The third column is how much money she saved by carrying out the balance transfer.



5.0 What Are The Best Balance Transfer Cards?

Click here for a short rundown on balance transfers in Australia, along with the four

most popular credit card balance transfer offers the Australian market has to offer.

Click here for the leading credit cards in all balance transfer sectors , with comparison

tables of 0%, 2.9% and 4.9% transfers.

6.0 Didn't Find What You Were Looking For?

Credit Card Finder has a hoard of balance transfer credit card resources, articles andguide. Listed below is a list of key webpages and articles on balance transfers:

Balance Transfer Guide : A branch out to key balance transfer articles. See for more

information on any particular concept or topic in relation to credit card balance

transfers.

Best Balance Transfers of 2009 : The leading credit cards of Australia for balance

transfers.

Balance Transfer Calculator : Input your hypothetical (or real) credit card balances

along with a potential balance transfer offer in order to determine how much you could

save.

0% Balance Transfers : Comparison of the leading 0% balance transfer offers.

2.9% for 12 Month Balance Transfers : Comparison of the leading 2.9% balance

transfer offers.

4.9% for Life Balance Transfers: Comparison of the leading 'for life' balance transfers.

http://www.creditcardfinder.com.au/best-credit-card-balance-transfer-rate-0-apr-cards.html

http://www.creditcardfinder.com.au/balance-transfer-credit-cards


http://www.creditcardfinder.com.au/credit-cards-for-balance-transfers











http://www.creditcardfinder.com.au/credit-cards-for-balance-transfers






If you have any comments, suggestions or queries please contact us at

[email protected]

This E-Book is completely free to share and use, provided it is not edited and full credit

is provided back to Credit Card Finder (http://www.creditcardfinder.com.au).

All written content and images copyright Credit Card Finder 2009.

balance transfer guide 2009

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