Balance Transfer Credit Cards <ul><li>A balance transfer credit card allows you to transfer your existing credit card bala...
What will this presentation cover? <ul><li>How do balance transfers work?   </li></ul><ul><li>How to compare balance trans...
What is a balance transfer? <ul><li>It’s when one credit card repays debts on other credit or store cards; so you now owe ...
Example of a Balance Transfer <ul><li>Example of a Balance Transfer </li></ul><ul><li>Old Card : American Express Platinum...
How to Choose the Best Balance Transfer Deal <ul><li>Question 1: Have you got a good credit history? </li></ul><ul><li>A g...
How to Choose the Best Balance Transfer Deal <ul><li>You have 2 options </li></ul><ul><li>Get more time to payoff debt  – ...
How to Choose the Best Balance Transfer Deal <ul><li>Question 2: Are you able to payoff Your debt within 6 months? </li></...
Warning about long term balance transfers <ul><li>There’s a hidden sting with these cards; if you spend on them, it’s at a...
How Do Low Rate Balance Transfer Credit Cards Work? <ul><li>Learn how low rate balance transfer credit cards work, and how...
How Do Low Rate Balance Transfer Credit Cards Work? <ul><li>A low rate balance transfer credit card is used when you have ...
How Do Low Rate Balance Transfer Credit Cards Work? <ul><li>Making a balance transfer will allow for a quicker repayment o...
Low rate balance transfer  credit card options: <ul><li>There are different kinds of low rate balance transfer credit card...
Low rate balance transfer  credit card options: <ul><li>It is important that you judge this correctly and do not go for th...
Low rate balance transfer credit card options: <ul><li>Very few credit cards in Australia charge a balance transfer fee, s...
Tips on what to look for in a low rate balance transfer credit card: <ul><li>What is the interest rate on balance transfer...
Tips on what to look for in a low rate balance transfer credit card: <ul><li>How soon do you have to transfer your balance...
Tips on what to look for in a low rate balance transfer credit card: <ul><li>How are your payments allocated? This is very...
How To Compare Low Rate  Balance Transfer Offers <ul><li>There are not too many issues to watch out for when you compare b...
Key points when you compare balance transfer credit cards: <ul><li>What interest rate applies to the balance transfer? Thi...
How long does the balance transfer rate run for? <ul><li>Another crucial question to ask when you compare balance transfer...
How To Use Low Rate Balance Transfer Credit Cards <ul><li>Budget! </li></ul><ul><li>This is not just an important factor i...
How To Use Low Rate Balance Transfer Credit Cards <ul><li>Don't spend! </li></ul><ul><li>The worst decision on  how to use...
How To Use Low Rate Balance Transfer Credit Cards <ul><li>Don't delay! </li></ul><ul><li>The best time to make your balanc...
Learn more at... .com.au
Balance transfer credit cards guide
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Balance transfer credit cards guide

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This presentation provides an overview of Australian balance transfer credit cards.

Use this guide to get an understanding of what balance transfer credit cards are, how they work, how to compare them, and how to make the most of them to save you money.

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Transcript of "Balance transfer credit cards guide"

  1. 1. Balance Transfer Credit Cards A Comprehensive Guide to Balance Transfers
  2. 2. Balance Transfer Credit Cards <ul><li>A balance transfer credit card allows you to transfer your existing credit card balances and repay them at a much lower rate, sometimes even 0% interest, over a set term. If you still have a leftover balance after the balance transfer offer expires, the remaining balance will generally revert to the standard purchase rate for the credit card. The following is a comprehensive guide to help you understand exactly what a balance transfer is, how it can benefit you by reducing your credit card interest repayments, and how to compare the available balance transfer credit cards to find the best offer for you. </li></ul>
  3. 3. What will this presentation cover? <ul><li>How do balance transfers work? </li></ul><ul><li>How to compare balance transfer offers </li></ul><ul><li>How to use a low balance transfer card </li></ul>
  4. 4. What is a balance transfer? <ul><li>It’s when one credit card repays debts on other credit or store cards; so you now owe it the money instead, hopefully at a special cheap rate. </li></ul>
  5. 5. Example of a Balance Transfer <ul><li>Example of a Balance Transfer </li></ul><ul><li>Old Card : American Express Platinum MoneyBack $3,000 at 19.99% and a Commonwealth Bank Platinum $2,500 at 19.74%. </li></ul><ul><li>New Card : the ANZ Low Rate Mastercard 0% p.a. for 6 months on balance transfers with a 12.49% p.a. interest rate. </li></ul><ul><li>The Process : You apply for the ANZ card and in the application ask them to balance transfer you American Express ($3,000) and Commonwealth bank card ($2,500). (You can also just transfer a single card if you only own one.) </li></ul><ul><li>Results : The American Express and Comm Bank cards are now zeroed out, the debt on these cards has been transferred to the ANZ card. You now owe $5,500, although will not have to pay interest on this for 6 months i.e. you are now being charged 0% interest on this debt. </li></ul>
  6. 6. How to Choose the Best Balance Transfer Deal <ul><li>Question 1: Have you got a good credit history? </li></ul><ul><li>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 won’t work for you. There are some tips you can use when you have bad credit, take a look at our bad credit balance transfer guide. </li></ul>
  7. 7. How to Choose the Best Balance Transfer Deal <ul><li>You have 2 options </li></ul><ul><li>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 </li></ul><ul><li>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. </li></ul><ul><li>Recommended Deals </li></ul><ul><li>12 months balance transfer offers </li></ul><ul><li>Lifetime balance transfer offers </li></ul><ul><li>6 months balance transfer offers </li></ul>
  8. 8. How to Choose the Best Balance Transfer Deal <ul><li>Question 2: Are you able to payoff Your debt within 6 months? </li></ul><ul><li>You have 2 options </li></ul><ul><li>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 </li></ul><ul><li>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. </li></ul><ul><li>Recommended Deals </li></ul><ul><li>12 months balance transfer offers </li></ul><ul><li>Lifetime balance transfer offers </li></ul><ul><li>6 months balance transfer offers </li></ul>
  9. 9. Warning about long term balance transfers <ul><li>There’s a hidden sting with these cards; if you spend on them, it’s at a high interest rate and can’t be repaid until all the cheap debt has been. They may try and tempt you with cashback or short term 0% deals on any spending; ignore it. The rule is simple; never, ever, ever, ever spend on these cards. If you do all the benefit will be lost. All these deals require you to pay a one-off fee when you do the transfer, the trade-off is you get it interest free for a long time. </li></ul>
  10. 10. How Do Low Rate Balance Transfer Credit Cards Work? <ul><li>Learn how low rate balance transfer credit cards work, and how to identify the best offers. Be aware of the main pitfall of making purchases on a balance transfer credit card. Check out the BankWest Lite MasterCard as a great all-rounder for balance transfers and future purchases. </li></ul>
  11. 11. How Do Low Rate Balance Transfer Credit Cards Work? <ul><li>A low rate balance transfer credit card is used when you have an outstanding balance on another credit card at a regular rate of interest. The process is that you apply for the new low rate balance transfer card and make the request to transfer the balance on the application form itself. This is used for balances that are likely to take more than a few months to pay off. Any less than that, and you will probably pay more on the new card's annual fee than you save on interest charges. </li></ul>
  12. 12. How Do Low Rate Balance Transfer Credit Cards Work? <ul><li>Making a balance transfer will allow for a quicker repayment of the balance because you can direct the money you save on interest towards paying it down, or alternatively you can take more time paying it off because you know that the interest charges are not so punitive. In the latter scenario, as balance transfer deals are for a limited time, you should still aim to clear the balance before the offer period ends and the interest rate reverts to the card's regular one. </li></ul>
  13. 13. Low rate balance transfer credit card options: <ul><li>There are different kinds of low rate balance transfer credit cards available. Your choice will depend on the amount you need to transfer, and crucially on how long you predict it will take to pay it off completely. The most common deal at the moment is the 0% balance transfer offer that is set for six months. You can also find slightly higher rates for a year or so, and higher rates again for offers that last until the transferred amount has been paid off in full, however long that takes. </li></ul>
  14. 14. Low rate balance transfer credit card options: <ul><li>It is important that you judge this correctly and do not go for the 0% deal just because it is the lowest, especially if the card's regular interest rate is one of the highest. If you fail to pay off the balance in full within the allotted period, you will then be subject to this regular rate. It is far better to take a slightly higher balance transfer rate for a longer period. Probably the best choice all-round at the moment is the BankWest Lite MasterCard which is offering 1.99% p.a. for 12 months on balance transfers, and the lowest regular rate on purchases of just 9.99% p.a. </li></ul>
  15. 15. Low rate balance transfer credit card options: <ul><li>Very few credit cards in Australia charge a balance transfer fee, so if you do see one that does charge you need to consider looking elsewhere, especially if an annual card fee is also being levied. However, bear in mind that you will very seldom find a great balance transfer deal and a zero annual fee combined. The credit card provider has to make some money somewhere. </li></ul>
  16. 16. Tips on what to look for in a low rate balance transfer credit card: <ul><li>What is the interest rate on balance transfers? The obvious question, and the answer is to look for a zero or very low rate. </li></ul><ul><li>Is there a balance transfer handling fee? As mentioned already, this is not normal, so the deal must be truly spectacular to justify one being in place. </li></ul>
  17. 17. Tips on what to look for in a low rate balance transfer credit card: <ul><li>How soon do you have to transfer your balance? </li></ul><ul><li>You may have up to three months to make the transfer before the option to do so expires. However, why would you want to waste that amount of time? Your best bet is to make the transfer request on the application form for the card itself. There is a special page for this. </li></ul><ul><li>Is there a balance transfer handling fee? As mentioned already, this is not normal, so the deal must be truly spectacular to justify one being in place. </li></ul>
  18. 18. Tips on what to look for in a low rate balance transfer credit card: <ul><li>How are your payments allocated? This is very important. Your repayments will be directed towards paying off your cheapest debt first, so you should not be making any purchases on a credit card that you have transferred a balance to, because these purchases will accrue interest at the regular rate until your transferred amount has been fully paid off. </li></ul><ul><li>Is there an annual fee? </li></ul><ul><li>As mentioned, this is usual on a credit card offering a good balance transfer deal. </li></ul><ul><li>The key to securing the best low rate balance transfer credit card is to do your homework: research and compare. </li></ul>
  19. 19. How To Compare Low Rate Balance Transfer Offers <ul><li>There are not too many issues to watch out for when you compare balance transfer credit cards, but you must get them right. This is especially the case if you are making a large balance transfer because so much more is as stake. A low rate balance transfer credit card is used when you have an outstanding balance on another credit card at a regular rate of interest. The process is that you apply for the new low rate balance transfer card and preferably make the request to transfer the balance on the application form itself. Balance transfers are for useful for amounts that will take more than a few months to pay off, because if you are looking at any less time, you will probably pay more on the new card's annual fee than you save on interest charges. </li></ul>
  20. 20. Key points when you compare balance transfer credit cards: <ul><li>What interest rate applies to the balance transfer? This is the first question to ask when you compare balance transfer credit cards because this is the whole point of your making a balance transfer - to enjoy a lower rate of interest on your outstanding debt. Rates for balance transfers range from 0% to around 9%, depending on the length of time the offer is for. Generally speaking, at the lower rate you will be allowed less time to settle your debt before the regular rate kicks in. </li></ul><ul><li>Offers come and go, so you may find that some of the higher balance transfer rates fall away somewhat if there are low regular rates available. Credit card providers know that an 8.99% balance transfer rate does not look so hot when there are credit cards that offer regular rates of just slightly more. At the moment, the BankWest Lite MasterCard is offering the lowest regular purchase rate at 9.99% p.a.. </li></ul>
  21. 21. How long does the balance transfer rate run for? <ul><li>Another crucial question to ask when you compare balance transfer credit cards. This is something you must judge correctly, or you may choose too short a period and end up with a portion of your debt still unpaid when the offer period expires and the higher rate takes over. </li></ul><ul><li>For the most part, the longer the offer period for the balance transfer, the higher the interest rate. However, you should always check on current offers because some can buck the trend a little and be pleasantly surprising. </li></ul><ul><li>Balance transfers that last for the life of the debt can also be found, but these tend to be more common on platinum level cards. </li></ul>
  22. 22. How To Use Low Rate Balance Transfer Credit Cards <ul><li>Budget! </li></ul><ul><li>This is not just an important factor in how to use a balance transfer credit card, it is also an important life-skill to possess. Presumably you will have chosen your balance transfer credit card carefully, picking one with a low enough rate and a long enough offer period to allow for the transferred amount to be fully paid off. This, of course, can only happen if you plan ahead. Whatever you used to pay on interest charges should now be paid towards the debt. The extra finances should not be seen as spare cash to spend on further items. </li></ul>
  23. 23. How To Use Low Rate Balance Transfer Credit Cards <ul><li>Don't spend! </li></ul><ul><li>The worst decision on how to use a balance transfer credit card is to treat it as just another credit card, meaning you use it for new purchases or cash advances. Once you have set your balance transfer in progress, you need to put your new credit card somewhere safe and not take it out again until after your offer period has expired. </li></ul><ul><li>This is because of the way credit card companies apply your repayments. It is variously called the order of payments, the adverse order of payments, or the allocation of payments. This keeps the more expensive debts earning interest for the credit card provider for the longest time. The message is therefore to avoid purchases and cash transactions on a credit card to which you have transferred a balance. </li></ul>
  24. 24. How To Use Low Rate Balance Transfer Credit Cards <ul><li>Don't delay! </li></ul><ul><li>The best time to make your balance transfer is when you are filling out the credit card application form. There will be a special page for this request to be made. Your balance transfer is time-limited in how long the offer is for - unless it is a balance-transfer-for-life - and also in how much time you have to set it in motion. It may be that you only have one to three months from the time you receive your card to actually request the balance transfer. If you are looking at a 0% deal for six months, then every day lost is going to cost you in the higher interest rate you are still being charged. If you move outside this transfer window, your chance to act will be lost. </li></ul>
  25. 25. Learn more at... .com.au

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