Gone a bit hard on your credit card lately? If so, an interest holiday of 18 months might be just what you need to finally clear that debt.
“But how is that possible?” we hear you ask.
The answer is a ‘balance transfer’, which allows you to switch your debt from one credit card to another – and can also give you an interest holiday in the process.
Not all credit cards allow balance transfers. And not all balance transfer offers include an interest-free period. Some, though, will freeze repayments on your existing debt (but not any new debt you accumulate) for a certain period.
For example, there are more than 10 institutions that allow consumers to transfer their credit card debt without paying any interest on that debt for at least 18 months:
- Bank of Melbourne
- Bendigo Bank
- Qantas Money
- St George Bank
- Suncorp Bank
- Virgin Money
(For more details, see the table at the bottom of this article.)
Balance transfer options
There are almost 100 credit cards on the RateCity website that offer 0% balance transfers. However, only a small portion of these offer 0% balance transfers for at least 18 months.
How to get the most out of balance transfers
When making balance transfers, there are several potential traps to be aware of:
- Most credit card providers won’t allow you to transfer your entire debt
- Many credit card providers charge a balance transfer fee
- The interest-free period applies only to old debt (not any new debt you accumulate)
- Unless you cancel your old credit card, you will now have two cards
- Many credit card providers charge an annual fee
To get the most out of a balance transfer, you might wish to:
- Pay off the entire debt during the interest-free period
- Cancel your old credit card as soon as possible
- Avoid spending on either your new card or your old card
You might also wish to cancel the new credit card once the entire balance transfer debt has been repaid. That way, you won’t be able to run up any more credit card debt.
Credit cards – the key numbers
The average interest rate of the approximately 200 credit cards on the RateCity database is 16.78%. The average annual fee charged by those cards is $134.60, while the average number of interest-free days they offer is 51.
Compare Australian balance transfer options
Ready to compare balance transfer credit cards?
Here are some credit cards that offer interest-free periods of at least 18 months for any debt you transfer as part of a balance transfer:
|Provider||Product||BT rate||BT fee||Annual fee|
|Citi||Platinum (Balance Transfer Offer)||0% for 26 months||1.5%||$0 for 12 months, then $199|
|Bankwest||Breeze Mastercard||0% for 26 months||2%||$0 for 12 months, then $79|
|Bank of Melbourne||Vertigo Platinum||0% for 26 months||2%||$0 for 12 months, then $99|
|BankSA||Vertigo Platinum||0% for 26 months||2%||$0 for 12 months, then $99|
|St George Bank||Vertigo Platinum||0% for 26 months||2%||$0 for 12 months, then $99|
|HSBC||Platinum Credit Card||0% for 22 months||$0||$129|
|HSBC||Low Rate Credit Card||0% for 20 months||2%||$79|
|Virgin Money||Virgin Australia Velocity Flyer Card (Ongoing Annual Fee Offer)||0% for 18 months||$0||$50|
|Westpac||Low Rate Card||0% for 18 months||$0||$59|
|Virgin Money||Virgin Australia Velocity Flyer Card (Bonus Points Offer)||0% for 18 months||$0||$64 for 12 months, then $129|
|Suncorp Bank||Clear Options Platinum Credit Card (Suncorp Bank Rewards)||0% for 18 months||$0||$129|
|Qantas Money||Qantas Premier Platinum||0% for 18 months||$0||$149 for 12 months, then $299|
|Suncorp Bank||Clear Options Platinum Credit Card (Qantas Rewards)||0% for 18 months||$0||$178|
|ANZ||Platinum||0% for 18 months||2%||$0 for 12 months, then $87|
|ANZ||First||0% for 18 months||2%||$30|
|Bendigo Bank||Low Rate Mastercard||0% for 18 months||2%||$45|