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Credit card balance transfers

What you need to know to make it work for you

Page reading time: 3 minutes

A credit card balance transfer is when you move the amount you owe (the balance) to another credit card.

If you're having trouble making repayments, there is help available. Contact your lender and talk to them about applying for financial hardship.

The new interest rate on the balance you transfer may be either 0% or a special low rate for a limited time.

If you can pay off the balance you transfer within that time, you may save money. But if you can't, it may end up costing you more.

If you're struggling with your credit card repayments, a balance transfer might not be right for you. There are better options to get your debt under control.

How to make a balance transfer work for you

If you're considering a credit card balance transfer, here's what to do to make sure it works for you.

Pay off the balance in time

The special low interest rate on the amount you transfer is called the balance transfer rate. It lasts for a limited time, usually between six months and two years.

After that, the interest rate goes up. The new rate may be higher than the interest rate on your original credit card. If you haven't paid off the whole amount yet, whatever is left will attract this higher interest rate.

Be realistic about what you can afford to repay in that limited time.

Limit spending on your new card

If you use your new credit card to buy things straight away, a different interest rate may apply. This interest rate — or 'purchase rate' — is usually much higher than the balance transfer rate.

Also, your repayments may go towards paying off the new purchases, instead of paying off the balance you transferred. This means you don’t get the full benefit of the transfer, and you add to your credit card debt.

If you limit your spending, you can focus on paying off the balance faster.

Cancel your old card

If you decide to do a balance transfer, make sure you cancel your old card. That way, you’ll avoid the temptation to create more debt.

Protect your credit score

When you apply for a new credit card or do a balance transfer, it's added to your credit report. If you apply several times in a short period of time, it can harm your credit score.

If you've transferred your balance before, it may be better to try to pay off your credit card than to transfer again.

Check how much you can transfer

Some cards set a maximum amount you can transfer, so you might not be able to transfer the full amount from your current card. If there's still money owing on your current card after the transfer, you'll have to pay interest and fees on that as well. It may not be worth paying interest and fees on two cards.

Compare balance transfers

Compare rates and fees so you get a balance transfer that will save you money, not cost you more later.

Compare credit card rates and fees

Balance transfer rate

  • the interest rate on the amount you transfer (the balance)
  • when it starts
  • how long it lasts (transfer period)

Balance transfer amount

  • how much you can transfer

Purchase (interest) rate

  • the interest charged on things you buy
  • if it changes after the transfer period

Interest-free days

  • the number of days you won't be charged interest on purchases
  • when this starts (straight away, or once you've paid off the amount transferred)

Rewards programs

  • which programs are included
  • what the fees are

Annual fee

  • the amount you pay every year
  • when it starts (straight away or later)

Other fees

Any fees for:

  • the transfer to the new credit card
  • late repayments
  • cash advances (cash taken out)
  • going over your credit limit
  • using your credit card to shop or travel overseas

Comparison websites can be useful, but they are businesses and may make money through promoted links. They may not cover all your options. See what to keep in mind when using comparison websites.

Set a payment reminder

If you go ahead with a credit card balance transfer, try your best to pay it off before the special interest rate ends.

Set a payment reminder in your calendar so you don't forget.