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What is a balance transfer?

Whether you’re just back from a holiday or some big expenses have cropped up unexpectedly, it can be easy for your credit card balance to blow out. And once it does, it might be hard to get it under control again. That’s where a balance transfer could help.


How balance transfers work

A balance transfer is when you move your credit card balance from your current credit card(s) to a different credit card, often to take advantage of a special offer or a lower interest rate. Many credit cards offer a low or 0% p.a. introductory rate on balance transfers for a set period of time. Over periods of 12 months or more, the amount you could save in interest by organising a balance transfer can really add up.

What to look for in a balance transfer offer

When looking for a balance transfer offer, take note of features like the balance transfer rate and how long it lasts, the ordinary interest rates and the annual card fee. You can then compare both the balance transfer rate and the ordinary interest rates with the current rate you’re paying on your credit card balance to see you how much you could save over time.

It’s also important to know how many card balances you can transfer over to the new card and what the limit is on transferred balances. For example, some cards only let you transfer up to 80% of your approved credit limit – if the amount you want to transfer exceeds this, only part of it will be transferred.

What to look out for

Balance transfers can sometimes be a great way to get on top of your debt, but they come with conditions that are important to understand. Here are a handful of things you might consider before applying:

  • Know the promotional period and what the rate will revert to after that. The 0% p.a. promotional rate may revert to 20% or even more after the offer ends.
  • Remember that the balance transfer rate doesn’t apply to new purchases you make on your card – there’s often a much higher rate for these.
  • You could use the balance transfer as a way to get on top of your debt and try to manage your credit card more carefully from then on. A great promotional rate isn’t a good excuse to go shopping again.
  • Check to see if there’s a balance transfer fee – this is often a percentage of the amount you’re transferring.

Sticking to your plan to get out of debt

If you really want to take control of your credit card debt, some cards even offer plans to help you keep on track when paying off your balance. For instance, Westpac offers SmartPlan, which helps you manage your repayments in a way that works for you.

Want to learn more? Read about what you can and can’t do with balance transfers. You can also estimate how much you could save with our balance transfer calculator.

You can also have a look at balance transfer offers on our Low Rate credit card.

Things you should know

Credit criteria, fees and charges apply. Terms and conditions available on request. Switches, upgrades or customers accessing employee benefits are ineligible for balance transfer offers. Our balance transfer offers may be varied or withdrawn at any time and are not available in conjunction with any other promotion.