01.Introduction
Credit cards companies commonly market low interest rates for debts transferred from other cards as a way to attract new customers. Usually, the interest rate applying to the balance transfer ranges from 0% to 5%, for a period of 4 months up to as long as it takes you to repay the debt.
Switching to a low-interest balance transfer credit card can be a good way to get a handle on your debt, or to avoid making repayments for a specified time. But for the unsuspecting or undisciplined, balance transfer cards can be a disaster. Card companies also use balance transfers to reel people in with tempting offers but then slug them with catches can create bigger interest bills than before.
How it works
- You sign up with a new card and provide details of your old card.
- The new company transfers the balance of your old card across to the new card.
- The balance transfer interest rate applies to that amount only.
- If you’re currently carrying a debt on your credit card, this can lower your repayments, or suspend them for a while, enabling you to get back on track.
Steps to choosing a balance transfer card
Read the 5 worst traps of balance transfer cards to get the real story and to make sure switching is a good idea.
Next, use the interactive table to compare the following features and decide what’s most important to you:
- Balance transfer interest rate
- Balance transfer period
- Standard interest rate for purchases and cash advances
- Annual fee
- Number of interest-free days
- Check other features of the card, such as the way it applies interest on late or incomplete payments. We've compared more than 20 major providers.
Before making the switch, double check the rates and fees with the provider (our rates, originally sourced from Canstar Cannex are correct as at March 2010), and whatever you do, don’t use the card for new transactions until the balance transferred is repaid in full.
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