How to pay off your credit card debt with a Balance Transfer

The best way to make the most of a Balance Transfer offer is to pay off all the transferred amount within the promotional period. That way, you’ll pay less interest, or no interest at all (subject to the promotional Balance Transfer offer).

To significantly reduce or clear the transferred amount within the promotional period, you’ll need to pay more than the Minimum Monthly Payment shown on your credit card statement. Remember, any balance remaining at the end of the promotional period will be charged interest at the much higher standard interest rate.^disclaimer

Helpful tip! Work out how much extra you can afford to pay per month and do your best to stick to it. Consider setting up automatic credit card repayments. At ANZ, we have a service that does this for you called CardPay Direct.^disclaimer

The promotional interest rate on a Balance Transfer card applies only to the balance that has been transferred.

Before you start making purchases on the card, it’s important to be aware of the interest rate that will apply to new purchases and cash advances during and after the promotional period.

Depending on the card and offer, purchases and cash advances are usually charged at a much higher interest rate than the promotional rate that applies to the transferred balance.^disclaimer

When you transfer a balance from one card to another card, the financial provider accepting the balance won’t close your old card. You’ll need to do this yourself.

Consider closing all other credit cards while you concentrate on paying down the transferred balance. Otherwise, you might pay off one debt only to find you’ve accumulated another elsewhere. Also, you may still have to pay fees or charges on those cards, depending on the terms and conditions that apply.

It’s also worth noting that the more credit cards you have open, the more it affects your debt-to-credit ratio – which is the amount banks and other financial institutions are willing to lend you – and potentially your credit score.

After paying off the transferred balance, evaluate if the card still suits your needs.

Many cards offer a promotional Balance Transfer interest rate that reverts to a higher interest rate once the promotional period ends.^disclaimer

It may be worthwhile shopping around to find a credit card that suits you better. If your current card no longer meets your needs, consider closing it or changing to a different one.

For tips and tools on managing debt visit ANZ Financial Wellbeing.

Remember, credit card issuers determine who is eligible for a Balance Transfer, based on things such as income, existing debt and credit scores. Generally speaking, the higher your credit score the better your chances of being approved. You may want to consider checking your credit score before submitting a Balance Transfer application.

Any balance remaining on the credit card after the promotional period ends will be charged at the standard annual percentage rate for balance transfers.

Explore all your options! There may be another debt consolidation tool such as a personal loan that may be better suited to your needs. If in doubt, speak to a professional about your situation.

Generally speaking, financial providers will not let you transfer a balance from one of their credit cards to another.

The most generous promotional Balance Transfer offers will typically require you to change financial providers.

At ANZ, we do provide Balance Transfer offers for existing ANZ credit card holders, but you must be transferring a balance from a non-ANZ credit card or store card to us. For more information see our Balance Transfers page.

At ANZ, the promotional Balance Transfer interest rate is the rate that applies to the transferred balance on a card with a Balance Transfer offer for the duration of the promotional period.

The promotional period is the length of time that the credit provider is willing to apply the promotional Balance Transfer interest rate to the transferred balance. Promotional periods can be anywhere from 6 to 28 months from the date an application is approved. Check the offer for full details.

The revert rate is the interest rate that applies to what’s left of the transferred balance once the promotional period (and the applicable promotional Balance Transfer interest rate) ends. At ANZ, it can be referred to as the ‘interest rate on standard Balance Transfers’ which is currently the same as the cash advance rate that ordinarily applies to that type of card.

Depending on the terms of the Balance Transfer offer, the interest rate on purchases is the interest rate that may be applied to purchases made on the credit card that the balance has been transferred to. Generally speaking, it will be a much higher rate than the promotional Balance Transfer interest rate.

The cash advance interest rate is the interest rate that applies to cash advances on a credit card. What is considered a ‘cash advance’ may vary between credit card providers. Be aware, the cash advance rate can apply to transactions other than just cash withdrawals on a card. At ANZ, you’ll find information about what is considered a cash advance in the Credit Card Conditions of Use (PDF).

A one-off fee may apply to move a balance across to a new card when you take up a promotional Balance Transfer offer. At ANZ, you can refer to the terms and conditions of the promotional Balance Transfer offer for details of the Balance Transfer Fee that applies.