Featured Balance Transfer Credit Card
The ANZ Low Rate MasterCard makes it even easier to do a credit card balance transfer with a low rate on balance transfers for the first 12 months which you can apply for during the application process. You will also save with a low rate on purchases and up to 55 days interest free on purchases.
- $58 annual fee
- 0% p.a. for 3 months (reverts to 13.39% p.a.) on purchases
- 0% p.a. for 3 months on balance transfers
- Cash Advance Rate of 21.49% p.a.
- 55 days interest free
- Enjoy the flexibility of being able to add up to 3 additional cardholders for free.
Read the ANZ Low Rate MasterCard – Balance Transfer terms and conditions.
Well-managed, a strategy of credit card balance transfer is a very smart and efficient way of getting out of debt.
Here’s how it works. You take a look at your credit card statements and realise you’re in far more debt than you care for. So you look around for a credit card that charges a lower rate of interest than the card you’re currently using.
Choice & Low Interest Credit Cards
You’ll be surprised at the number of credit card companies that offer cards with a lower rate of interest. They do it, not from the goodness of their hearts, but because they want to gain – and hopefully keep – your business.
You acquire your new card, you do the <credit card balance transfer thing, and then you pay off your debt at the new low rate. So far, so good.
Beware – Introductory Period
But here are the potential traps. The new card may have a low rate only for a short introductory period. If you keep spending at the same old rate and you don’t monitor your spending carefully, you’ll find you’ve run up the same level of debt and the new, higher interest rate on that debt has kicked in. Result: you’re back in the same debt hole you were in at the outset.
So the rules are: know when the low credit card interest rate runs out and be aware of your spending habits and whether you should be changing them.
Where The Money Goes
A little known, but highly important, feature of credit card balance transfer strategies is the fact that when you pay off your credit card debt, the money is first applied to the debt with the lowest interest rate. You may feel that you’re getting on top of debt, but in reality it’s taking longer than you might like and that high interest debt is still hanging around.
Best practice: don’t use that new card to buy new things until all the debt is paid off. Otherwise, all you’re doing is filling up one debt hole with money you’re shoveling over from a new, deeper debt hole.
Card Hopping
Some people think it’s smart to carry out ‘card hopping’. This is the practice of constantly changing cards looking for cheaper interest rates, trying to stay ahead of the debts run up on your previous cards.
It’s a short term strategy that the credit card companies soon pick up on because your credit history is littered with applications for new cards. The companies soon stop approving cards and you’re left with no card at all.
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Posted on Wednesday, January 12th, 2011 at 10:38 am
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