No Balance Transfer Fee Credit Cards

No Fee Balance Transfer Credit Cards

Balance transfer credit cards are designed to save you money so as well as saving on interest charges you want to be sure you are paying the least amount of fees possible too. Therefore, a no fee balance transfer credit card could be just what you are looking for, as it means you don’t have to pay a handling fee to transfer your balance. However, each balance transfer offer has unique features and benefits and the no fee balance transfer is no different so you need to make sure that all of the aspects of the balance transfer suit you, from the fee, to the interest rate, to the term, and more.

 

That is why we can answer all of your questions right here, about:

• What is a balance transfer?
• What is a no fee balance transfer?
• What is a 0% balance transfer?
• How do I compare balance transfer offers?
• How do I use a balance transfer credit card effectively?

 

 

Comparison of No Balance Transfer Fee Credit Cards:

		Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual Fee	Cash Advance Rate (p.a.)
St George Vertigo	The StGeorge Vertigo Mastercard offers you a low purchase rate and up to 55days interest free on your purchases.	13.24%	0.99% for 12 months	$55	21.49%
Bank of Melbourne Vertigo Credit Card	Save money with a low annual fee and a low balance transfers rate.	13.24%	0.99% for 12 months	$55	21.49%
NAB Gold Card	A credit card with a low balance transfer rate with no balance transfer fee.	19.74%	1% for 12 months	$90	21.74%
Bankwest Breeze MasterCard	A low introductory purchase rate and balance transfer for 12months.	10.99%	4.99% for 12 months	$69	21.99%
Citibank Clear Platinum Card	An introductory low rate offer on balance transfers and purchases.	11.99%	2.9% for 12 months	$99	21.74%
Westpac Low Rate Card	A simple low rate credit card featuring low rates on purchases, balance transfers and a low annual fee.	0% for 6 months (reverts to 13.49%)	0% for 6 months	$45	21.49%

 

What is a balance transfer credit card?

Once you have accumulated a balance on your credit card and that balance starts being charged interest, it can become very difficult to repay. Often interest on credit cards is charged at around 15% but sometimes as high as 20% or more. As a result you are repaying your original purchase, plus interest, plus compounding interest as your balance rolls over from month to month.

However, if you were able to repay just your purchases, with little or no interest, you’d have a fighting chance once again of reducing your balance. This is exactly the chance a balance transfer offer gives you.

A balance transfer credit card:

• Is an ordinary credit card with a special offer. A balance transfer credit card can be any type of credit card, and most Australian providers run balance transfer promotions. As a result, you apply for a balance transfer credit card in the same way as you would a normal credit card, and your application must be approved before you can make the transfer.

• Your new balance transfer card repays the balance of your old credit card. Upon approval of your balance transfer credit card, your new card takes over the balance of your old one and pays the balance of your old high interest credit card to zero.

• Balance transfer offers are low or 0% interest. With your balance transferred to a low or 0% interest rate balance transfer credit card, you can continue to repay the same amount, but more of your repayment is going towards repaying your balance, rather than interest charges.

• Balance transfer offers can be for a limited time. Generally the lower the interest rate, the shorter the balance transfer period. For example a 0% balance transfer may be for just six months, while a 4.9% balance transfer may be for the life of the balance.

• Balance transfer interest rates only apply to balances transferred. The low interest rate on a balance transfer credit card does not apply to new purchases or cash advances you make on your balance transfer credit card. After the balance has been transferred from your old card, your new balance transfer card becomes just like any other credit card for new purchases. Plus, your new purchases will be charged interest right away, until you have repaid your original transferred balance in full.

 

Once you have repaid your transferred balance you can keep the balance transfer card as an ordinary credit card, or close the account and enjoy being debt free.

What is a no fee balance transfer credit card?

Some Australian credit card providers will charge a handling fee to take over your balance from another credit card. Handling fees were introduced to help credit card providers cover their cost when they knew they wouldn’t be able to make enough profit from the interest you paid – or didn’t pay – and to cover the administration costs of processing the transfer. However, the handling fee is in addition to other card administration fees such as the annual fee.

This fee could be a flat $50 fee per transfer, or you could be charged between 1% and 3% of the balance you are transferring as a handling fee. Other balance transfer offers may cap the fee charged, so you may pay 3% or $100 whichever is lower.

A no fee balance transfer will not charge a handling fee to transfer your balance to your new low rate card however, there may still be costs associated with your balance transfer such as:

• An annual fee on your balance transfer credit card.
• Costs to close your old credit card account.
• Fees to make payments to your credit card from your transaction account, to pay by cheque or BPAY charges.

 

Other features of a no fee balance transfer credit card include:

• A low interest rate. It is very unlikely that you will find a balance transfer offer for a 0% interest rate and a no fee balance transfer. However, a no fee balance transfer credit card will still have a much lower interest rate than your standard credit card, and the balance transfer rate should be around 2% or 3% and not charge you much more than 5% interest.

• A long, or for life balance transfer. Where a 0% balance transfer offer will typically only be available for 6 months, a no fee balance transfer offer can be much longer, often 9 or 12 months, or even for the life of the balance. A for life balance transfer means you pay the lower interest rate on your transferred balance until the balance is repaid in full.

 

There are different types of balance transfer offers just as there are different types of credit card deals for different people, so you could be best suited to a no fee balance transfer if:

• You have a large balance to transfer. The larger the balance, the more you will have to pay if your balance transfer card attracts a handling fee. For example if you have a $5,000 balance to transfer and you are charged a 3% handling fee that is and additional $150 you have to pay, before you’ve gotten any closer to repaying your balance.

• You need time to repay your balance. Whether you have a large balance to repay or simply little room in your budget six months may not be enough time to repay your balance in full before the interest rate reverts to the standard card rate. Therefore, by choosing a no fee balance transfer card, you will be able to find a balance transfer term of around 12 months or more, often a for life balance transfer.

 

What is a 0% balance transfer?

If you take advantage of a 0% balance transfer offer, you can transfer your balance to your new credit card, and cease paying interest. This means that all of your repayment goes to reducing your balance and you pay off your card sooner. Other features of a 0% balance transfer credit card include:

• A handling fee. In exchange for a 0% interest rate on your balance, you may have to pay a handling fee which can add as little as a flat fee of $50 to your transfer, up to several hundred dollars more if you are charged a percentage of your balance.

• A limited interest free time. A 0% balance transfer offer will typically run for just six months, after which time if you haven’t repaid your transferred balance in full, you will begin to be charged the standard purchase rate, or in some cases the cash advance rate.

 

A 0% interest rate on your credit card balance can sound too good to be true, so first consider whether you are suited:

• You have a low balance to repay. This will reduce the handling fee you are charged because with a lower balance, the percentage of the fee will be less. For example, you may have gone overboard with the Christmas shopping and want to curb the damage before the balance gets out of control, so you only have around $1,000 to repay. Or you have had to use your credit card for an emergency and want to clear the balance before your credit card bill becomes the next emergency.

• You have space in your budget to repay the balance quickly. The standard interest rate charged on a 0% balance transfer credit card is typically quite high, and could be around the 20% mark which you’ve been trying to escape. Therefore, it is important that you are able to budget to repay your balance within the 0% balance transfer period.

 

How do I compare balance transfer offers?

As well as determining if you are suited to a certain type of balance transfer, there are features which you can compare in your search for a balance transfer offer. For example, look at:

• The interest rate. The aim of a balance transfer credit card is to pay a lower interest rate, so make sure that you are getting a competitive interest rate for the type of balance transfer card you choose. Keep in mind that standard low interest rate credit cards will only charge around 11% interest so you want a balance transfer offer which is much lower. If you are not suited to a 0% balance transfer offer, look for an interest rate around 3% or 4% to give you the most benefit as you can make significant savings in interest, and still repay the same amount.

• The term. Look at your budget and find places where you can channel more funds into your credit card repayments. Then look at how long it will take you to repay your credit card balance making those higher repayments and look for a balance transfer offer with a matching term. If you’re looking at budgeting to repay your balance over a long period of time such a 12 months, make sure that you can sustain those budget cuts and maintain the motivation to repay your credit card balance within the term.

• The fees. It is important to mention the handling fees of a balance transfer again, because they can be easy to miss in your comparisons. The credit card providers want you to focus on the low interest rate, not on the fees you have to pay to get it so make sure you read and understand all of the fine print before you make the transfer. Also compare annual fees on the balance transfer credit cards as credit card annual fees can be as much as $200 or more, and even if you take less than a year to repay your balance, you will be charged the annual fee at the beginning of the year when you apply. The way you pay off your balance transfer credit card may also attract fees, so if you prefer to write cheques to your card to follow the paper trail or go into a branch to physically hand over the cash then make sure there are no additional transaction fees charged. Some providers will also charge you to make BPAY payments to your credit card so check your current transaction accounts too.

• The features of the card. A balance transfer credit card application is a great opportunity to sign up for a new and better credit card for the long term, so if you want to close your old credit card and sign up for a new one, compare the features you will use once your balance is repaid. For example, compare the interest free days, the standard purchase rate, the fees to make payments from the card, and the rewards programs you can benefit from with your spending under control.

 

How do I use a balance transfer card effectively?

If you already have a balance on your credit card which is out of control, you don’t want to make your financial situation worse by misusing your balance transfer credit card as well. Therefore, make sure you follow these simple tips, and advice, on using your balance transfer card to effectively repay your balance, save on interest, and avoid common balance transfer traps.

 

1 – Make the transfer

After understanding the difference between the types of balance transfer cards, and then comparing the offers to find one which best suits you, you want to make sure you make the transfer to your new card as soon as possible. Some balance transfer cards will allow you to enter your old card details in your application form and make the transfer in that way. Others however, will require you to manually transfer the balance once your new card has been approved and activated.

Therefore, make sure you transfer your balance as soon as possible to get the maximum amount of your balance transfer term, and to avoid the temptation to start using your balance transfer card as a regular credit card. Also remember that some balance transfer offers are only valid for 30 or 60 days after an application has been approved.

 

2 – Make the repayments

Do whatever you have to do to make sure you make your balance transfer credit card repayments on time because often defaulting on a payment can void your balance transfer offer. You may decide to set up a direct debit automatically each month to your card, or add a reminder to your diary to ensure the amount is paid, but you will need to stick to your budget and stick to your repayment plan carefully.

This includes mapping out exactly how much you need to repay each month to pay off your balance within the balance transfer term. Leave yourself room to pay off your balance two to three months early because you may run into emergency expenses, and if you have to transfer your balance again, you may need several months to compare, and process the new transfer.

Typically a credit card repayment will be 3% of the balance owing, plus interest so you should be able to keep paying the same amount you were paying on your high interest card, and repay your balance faster. However, make sure to check for balance transfer repayment restrictions which may require you to pay more than the 3% each month.

 

3 – Don’t spend on your balance transfer card

Credit card providers will allocate payments made to a credit card balance to the oldest balance first. On a balance transfer card, the oldest balance is the transferred balance, and until that is repaid, any new balances will be immediately charged interest, and not allocated any of the repayment amount. With your repayments going to your old balance, your new balances will be attracting the purchase interest rate until your transferred balance is repaid in full, because even if the card has interest free days, they do not apply to new purchases unless the balance had been paid down to zero before you made the new purchase.

This includes avoiding cash advances because most credit cards will charge an even higher interest rate on cash transactions than on purchases. These withdrawals will then go on earning a high rate of interest until you have repaid your balance transfer.

 

4 – Don’t spend on your old card

If you are in need of a balance transfer then it is probably because your spending and debt levels are out of control. Therefore, you need to make sure you implement new financial habits to change your behaviour for good, and avoid the need for another balance transfer down the track.

Therefore, avoid using your old credit card – which now has a very tempting zero balance – because the balance of the card is not repaid, it has just been moved. You can keep the card if you like the account and features, but restrain from using it until the transferred balance is repaid and you are out of debt. The feeling of freedom and financial responsibility will be liberating, and should be enough to encourage you to avoid a similar situation in the future, and implement responsible credit card spending habits.

 

5 – Carefully consider before you card hop

Set a reminder in your diary for two months before the end of your balance transfer term. Then make an honest assessment of whether you will be able to repay the balance before the end of your term, and whether you have kept on track with your repayments. If you don’t think you will be able to finalise your transferred balance within the time remaining, you could be facing the higher purchase or cash advance rate on your outstanding balance.

Therefore, you may be considering transferring to another balance transfer to being another low or 0% interest term. While this can help you repay your balance at a low interest rate in a once off circumstance, carefully consider your options before you make multiple card hops. Each time you apply for a balance transfer credit card, the application goes on your credit report and if you apply for a personal loan or a home loan, your lender will see these credit card applications as a negative aspect to your report.

You could also be paying a balance transfer fee each time you make a transfer to avoid the end of the low interest term, so you could be costing yourself more money as those $150 fees could be significant monthly payments towards reducing your balance.

Balance transfer credit cards can help you manage your debts and put you on the road to financial responsibility, but make sure that you compare all of the features and understand all of the fine print before you make the transfer because there are no fee balance transfer offers available. However, it is up to you to run the calculations on your budget and decide whether a balance transfer fee is a small price to pay for an interest free chance to repay your credit card debt.

Posted on Tuesday, August 10th, 2010 at 6:08 pm

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