It may not often feel as though Australian banks are on your side as they charge you fees, and interest, and rising interest. However, if you know how to best use a balance transfer credit card, you can take advantage of some very generous offers coming into the balance transfer market. You have probably realised by now that your credit card provider doesn’t want you to repay your balance because as long as you have a balance they are earning interest.
Featured 12 Months Balance Transfer Credit Card
Apply for Citibank Clear Platinum Credit Card and enjoy a guaranteed low interest rate on balance transfers and purchases .
- $99 annual fee
- 0% p.a. for 6 months (reverts to 11.99% p.a.) on purchases
- 0% p.a. for 6 months on balance transfers
- Cash Advance Rate of 0% for 6 months thereafter reverts to 21.74% p.a.
- 55 days interest free
Luckily several Australian credit card providers have recognised not only how hard it is to repay a credit card balance at 15% or 20% interest, but also how long it can realistically take. As a result there are a range of 12 month balance transfer offers available to help you more easily become debt free, and with a very low interest rate – one which rivals many shorter balance transfer terms – you can enjoy minimal interest charges and a longer period of time to repay your debts.
Top 2.9% for 12 Months Balance Transfer Offers
To help you decide on a balance transfer offer, compiled here are the top three most competitive, inclusive and easy to use 12 month, 2.9% interest balance transfer offers:
| Interest Rate (p.a.) | Balance Transfer Rate (p.a.) | Annual fee | Cash Advance Rate (p.a.) | ||
|---|---|---|---|---|---|
 Citibank Clear Platinum Card |
0% for 6 months (reverts to 11.99% ) | 0% for 6 months | $99 | 0% for 6 months thereafter reverts to 21.74% |
  |
 St George Vertigo |
13.24% | 0.99% for 12 months | $55 | 21.49% |
|
 Bank of Melbourne Vertigo Credit Card |
13.24% | 0.99% for 12 months | $55 | 21.49% |
|
 NAB Gold Card |
19.74% | 1% for 12 months | $90 | 21.74% |
|
 Bankwest Zero MasterCard |
1% for 6 months (reverts to 17.99% ) | 4.99% for 12 months | $0 | 18.99% |
|
 Bankwest Breeze MasterCard |
10.99% | 4.99% for 12 months | $69 | 21.99% |
|
 Virgin Flyer Credit Card |
20.99% | 1.9% for 12 months | $99 | 20.99% |
|
 Citibank Rewards Credit Card – Platinum Card |
20.99% | 0.9% for 9 months | $199 | 21.74% |
|
What is a 2.9% for 12 Months Balance Transfer Offer?
To take advantage of 2.9% interest for 12 months, you must be making a balance transfer from a credit card from a different provider than the one offering the balance transfer special. For example, you cannot transfer a balance from a Citibank credit card to take advantage of a Citibank balance transfer offer.
Over the balance transfer period of 12 months your transferred balance will have the low 2.9% interest rate applied, meaning your monthly repayments will be lower. On a standard credit card, much of your monthly repayment is comprised of interest charges, and very little goes towards paying down your balance. However, with a lower interest rate and lower repayments on a balance transfer card, you can afford to make additional repayments, which will be applied directly to your principal balance.
Interest is calculated daily on a balance transfer credit card, but because you will not be making new purchases on your balance transfer card, your balance will not change from day to day, but will only reduce from month to month.
This allows your balance transfer credit card provider to calculate your average daily balance (ADB) over the statement period more easily. Typically an ADB is calculated by adding up the daily ending balance and dividing this by the number of days in the statement period.
Your provider will then calculate your daily rate by dividing the annual percentage rate by 365 days in a year. Your average daily balance will then be multiplied by the daily rate, and then multiplied by the number of days in the statement period to arrive at your repayment amount.
Therefore, if you have a credit card balance of $3,000 which the average Aussie does, and you are currently paying 18% pa. on your standard credit card, you can see just how much you can save with a balance transfer.
With a 12 month balance transfer offer charging 2.9% interest you will need to make monthly repayments of $270 to pay off your balance within the transfer period, to avoid the higher revert rate. In this instance you are paying just $45 interest and your card balance is cleared within 12 months.
If you were making the minimum monthly repayments on your credit card with an 18% interest rate, you would be paying around $150 a month. It would also take you two years to clear your debt – providing you stopped using your card – and you would have paid $593 in interest over that time. In this instance you can save more than $550 in interest.
Even if you were able to make larger monthly repayments on your standard credit card charging you 18% interest, paying $270 per month would still see you repaying your balance for more than a year – making 13 repayments – and paying $307 in interest. So even in this case, you are paying the same amount, and a balance transfer would still save you more than $260 in interest, plus your card will be repaid sooner.
To compare exactly how much you can save on your current credit card and balance, use our balance transfer calculator.
How to Choose the Best 2.9% 12 Month Balance Transfer Offer
While all offers will charge you the same low 2.9% interest rate over the same 12 month period, you also need to compare the other features and benefits of the cards to make sure you are getting the best deal for you.
How to compare the annual fees
Since you are not using your balance transfer card as a credit card, you are not enjoying any of the other features which typically justify an annual fee. As a result, you can be paying hundreds of dollars in fees, for a card you are simply making payments to. Plus, even if your repay your balance within the 12 month period or earlier, an annual fee is typically charged at the beginning of each year, so is not a fee you can escape.
The annual fees charged on the top 2.9% 12 month balance transfer offers are:
- Citi Silver has an annual fee of $89.
- Citi Business Gold credit card has an annual fee of $149.
- BP Citi Mastercard credit card has an annual fee of $79.
Watch out for a balance transfer fee
Some balance transfer providers will charge you a fee for making the transfer from your old credit card. The fee may be a flat charge or could be a percentage of the balance you are transferring so you need to make sure the savings you will make in interest outweigh any balance transfer fees.
The top 2.9% 12 month balance transfer offers charge the following transfer fees:
- Citi Silver charges no transfer fee.
- Citi Business Gold credit card charges no transfer fee.
- BP Citi Mastercard credit card charges no transfer fee.
How to compare the revert rate
The revert rate is the rate of interest which will be applied to any outstanding balance at the end of your 12 month balance transfer period. Some credit card providers will use their standard purchase rate while others will charge their higher cash advance rate. In comparing the balance transfer revert rate you need to decide whether you will be able to repay your balance within 12 months, or whether you may be affected by the standard rate.
The revert rate on the top 2.9% 12 month balance transfer offers is:
- Citi Silver uses the cash advance rate of 21.24% after the 12 month balance transfer period.
- Citi Business Gold credit card reverts to the cash advance rate of 20.99% interest.
- BP Citi Mastercard credit card charges the cash advance rate of 20.89% interest on balances remaining after the balance transfer term.
Compare when the balance transfer must be made
In some cases you are required to transfer the balance from your standard credit card within a certain period of time after approval to qualify for the balance transfer rate. However, in all cases you want to make sure to transfer your balance as soon as possible because your 12 months will begin from the date of approval, not from the date of transfer.
The balance transfer cut off for the top 2.9% 12 month balance transfer offers is:
- Citi Silver allows you to apply for a balance transfer in your application or by logging into internet banking. The transfer can take up to 10 days to be processed.
- Citi Business Gold credit card takes up to 10 days to process a balance transfer application, which can be made either in your credit card application, or once your card is approved, through internet banking.
- BP Citi Mastercard credit card lets you make your balance transfer at the time of application, or you can wait and transfer your balance once your new card has been activated by using internet banking. Balance transfers can take up to 10 days to be processed.
Why compare the purchase interest rates?
You may have gotten in trouble with bad debts on your old credit card because it was not suited to your needs, or because it had such a high purchase interest rate. Therefore, you may be looking to keep your balance transfer credit card as your standard credit card after you have repaid your balance, so you will need to compare the standard interest rates.
The purchase rates of the top 2.9% 12 month balance transfer offers are:
- Citi Silver purchase interest rate is 20.74%.
- Citi Business Gold credit card has a purchase rate of 20.49%.
- BP Citi Mastercard credit card charges the same purchase and cash advance rate of 20.89%.
Why compare the benefits and inclusions of balance transfer credit cards?
Being burned by bad debt is no reason to shy away from credit cards as there are a number of features which can help you manage your finances, your lifestyle and your purchases more easily. Plus, having a credit card with the right features for your needs can reduce the risk of you needing another balance transfer in the future, because now your card works for you.
Each featured card has an extended interest free period so once your balance is repaid to zero, you can spend the bank’s money within the interest free period, and repay your balance in full to avoid interest charges. This gives you the opportunity to stick to responsible spending habits, within your budget, and within your interest free days.
Additional features of the Citi Silver credit card:
- Up to 55 days interest free.
- Just $15 for additional card holders. This means more help in earning your rewards points and for a low additional fee.
- Free rewards program. Your points never expire with Citibank and you can earn one point for every one dollar spent, towards gift vouchers, merchandise or cash back on your account.
Additional features of the Citi Business Gold credit card:
- Up to 55 days interest free which can help your business manage cash flow by still being able to pay your bills throughout the month interest free, while you wait for your customers to pay their invoices.
- Up to 99 additional card holders can be added to the account for an easier alternative to petty cash, to give your staff the freedom to make business purchasing decisions and make bookkeeping easier in tracking purchases.
- You are enrolled in a free rewards program where you can earn 1.25 points for every $1 spent. You can also participate in the Qantas Frequent Flyer program and earn one Frequent Flyer point for every $1 spent. Points can be redeemed for gif vouchers, merchandise or cash back onto your card.
Additional features of the BP Citi Mastercard credit card:
- Up to 55 days interest free on your purchases when you pay your balance down to zero in the previous statement period.
- Has the same interest rate for cash advances as for purchases, so you are not penalised with extra interest if you need to access cash from your credit card.
- Save 5% on petrol and everything else you buy at BP service stations.
- Earn cash back rewards for every dollar you spend which you can credit back to your card.
How to Use a 2.9% for 12 Months Balance Transfer Offer
When you make the decision to apply for a balance transfer offer, you need to be committed to your debt repayment plan from the beginning by not delaying your transfer. If your chosen balance transfer offer does not require you to make the transfer in the application, make sure you make the transfer as soon as possible after approval and activation of your card. You don’t want to miss out on any of your 12 month low interest rate period, and the balance transfer interest rate period begins right away.
Budgeting tips to repay your balance transfer
To truly take control of your credit card balance you want to repay that balance within the 12 month period to avoid the revert rate. Therefore, use our balance transfer calculator to see exactly how much you will need to repay each month, to pay your specific balance off within 12 months.
Make sure you budget for a comfortable and realistic repayment amount because missing a payment and incurring late fees and default charges can undo all of your hard work on repayments. Also set a reminder two to three months before the end of your 12 month balance transfer period, so you can check you are on schedule to repay your balance in full. If you’re not going to make it, look for ways to allocate more of your budget to your repayments, or start looking for a new low interest rate balance transfer offer.
Why is it so important not to spend on the card?
Not only are you getting back into bad credit card habits by spending on your balance transfer card, you are also setting back the savings to be made on your balance transfer. When you make a purchase on your balance transfer card within the transfer period and before you have repaid your balance, it will begin to earn the full purchase interest rate right away.
This is because interest free days do not apply unless the balance has been repaid to zero the previous month. Plus, your new purchase will go on earning interest until your balance transfer is repaid in full, thanks to the hierarchy of credit card repayments. The hierarchy outlines where your repayments are allocated, for example the Citibank Silver balance transfer credit card uses your repayments to first pay your interest charges accrued, then any late fees, then the principal from a balance transfer, then the principal from a purchase and then the principal of a cash advance.
Posted on Saturday, October 16th, 2010 at 9:48 pm
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