Low Balance Transfer Credit Cards
Balance transfers are typically the result of changing credit
card provider or transferring debt. Many banks treat balance transfers
as a cash advance, therefore you are subject to high rates of interest
is charged immediately. With a typical interest rate of 15% or more on
cash advances, a balance transfer can be costly if you’re unable to pay
back the debt in a short period of time.
Many banks offer low interest rates on balance transfers for the first 6
months as an incentive to apply for their credit cards. However,
following this period most banks charge cash advance interest rates,
which can exceed what you’re currently paying if the debt is currently
on a low interest rate card. If you’re able to pay off the debt in 6 to
12 months, transferring your debt and taking advantage of the
introductory offer can be cost effective in limiting the interest gained
over a short period of time.
There are often stipulations that go alongside the introductory offers,
so you should check these before applying. Many banks, for instance,
offer 0% interest on balance transfers for the first 6 months, though
often this is only applicable to your first balance transfer. This means
that if you wish to transfer multiple debts, you may be subject to a
high level of interest immediately.
The low balance transfer credit cards can be a good way of consolidating
existing debts or taking control of those gaining high interest. Some
Australian banks offer long-term rates as low as 8.99%, saving you a
considerable sum on the standard rates. Although you generally miss out
on introductory rates with a dedicated low balance transfer credit card,
the interest rate is considerably lower than the majority of credit
cards. |
