With so many credit cards out there, you can be left overwhelmed and confused with no idea which one would be best for you. It obviously helps if you know what you’re looking for so that’s what we want to help you to do, in this case specifically in the area of finding the best balance transfer deal.
What is a Balance Transfer Card?
A balance transfer card allows you to transfer a balance (or debt) from another place over to it and usually offers you a good interest rate for an introductory period on the balance transferred. The benefit of this is that if you’ve got an outstanding balance on a high interest rate card and are paying a fortune in interest, you can get a break and make some headway by enjoying a 0% or low interest rate for a period of time once you’ve transferred the balance. Of course there are different balance transfer rates and periods so not every card is as good as the next.
How do You Choose a Good One?
With so many different cards offering a balance transfer facility, it can be tricky and time consuming to settle on one. Here are some tips to help narrow down the field.
The main issue in picking a balance transfer card that suits you is the size of the balance you’re going to transfer and how fast you can pay it off. If you’ve got a small debt and can pay it off in 3 months for example, then a 0% balance transfer offer for a period of 3 months will suit you well. You’ll pay nothing on interest, every penny will go toward getting your debt down and you’ll be done by the time the 3 months is up.
If you’ve got a much larger balance and it will take you say, a year or more to pay off, a 0% balance transfer rate for 3 months won’t do you much good at all because you’ll then revert back to a high interest rate, which will make it difficult to continue to make headway. In this case, you’d be better off with a low balance transfer rate for 12 months giving you a reasonably low rate (much better than 20%!) for a longer period. This will minimise the amount of interest you pay on that debt and give you the extra time you need to pay it off.
So the first thing you need to do is figure out what sort of figures and time frames will work best for the balance you’re wanting to transfer. Find some cards that offer what you’re looking for and then hone in on the comparison from there.
Choosing a Credit Card
Another important factor to consider as you choose your card is what kind of credit card user you are. Are you a debtor, always carrying your balance over and usually just making minimum repayments and paying the interest, a transactor, or a frequent flyer who is a stickler for paying off your balance each month to avoid the interest? The way you use your credit card will need to play a big part in the choice of credit card you make.
If you’re a debtor, you’ll want a card with the lowest ongoing purchase rate possible, if you’re a transactor, you can get away with a higher interest rate card that may have other features you can benefit from, such as a rewards program. A suggestion we would make here is this: If you’re a debtor, become a transactor! You will save yourself and thank yourself in the long run!
So by now you’ve determined what kind of balance transfer rate and period you’re looking for and what kind of credit card user you are (and therefore what kinds of interest rates would be sensible to go with).
Next you want to look at things like:
Interest free days
CANNEX Star ratings or equivalent ratings
Rewards/frequent flyer programs
Extra features like 24 hour emergency services, insurances, additional cardholders, etc.
Maximum credit limit
Credit card provider
Again, what you’re looking for will be determined by you, your spending habits, your preferences and your lifestyle.
In terms of annual fees, you always want to make sure that they’re worth your while in that you’ll get more than what you pay in fees out of the card. Otherwise the fee negates the purpose of having the card and costs you rather than helps you.
Interest Free Days
In terms of interest free days, you’ll need to be aware of what suits you and make sure your card caters for what you need (longer or shorter interest free period). If you’re organised, spending within your means, on top of repayments etc. (a transactor), the shorter period could well be fine for you.
CANNEX Star or Equivalent Ratings
CANSTAR CANNEX star ratings are a consumer-friendly benchmark that help you compare financial products based on their rates and features. CANSTAR evaluate literally thousands of products from hundreds of finance institutions using a sophisticated ratings methodology, which is under constant review by their financial analysts to ensure its accuracy and validity in the current market. This is a good way to get a feel for what the experts think of the card you’re considering.
In terms of rewards programs, you’ll want to ask yourself whether you actually need it or can benefit from it. Keep in mind that to benefit from a rewards program you usually need to spend a lot. If you’re a small spender, you probably won’t earn enough points to really get you much. Always read the terms and conditions of the rewards program. Check if it’s free, what the points earn rate is, what the real value of a point is, whether points are capped or expire, what you can redeem points for, etc. Don’t sign up for a card with a rewards program unless you’ve done the maths and actually know you’ll get something decent out of it.
A lot of extra features like 24 hour concierge services, insurances, additional cardholders at no extra cost are only available on higher level cards. Again you need to evaluate what your income, spending and needs are and what you will benefit most from. There’s no point having extra features you can’t realistically benefit from!
Maximum Credit Limit
What is the maximum credit limit you can get? Does it suit your needs? Remember higher is not always better, especially if you can’t control your spending. Limits are set in place to protect you from spending more that you’re able to repay. Just make sure your credit limit meets your needs and spending (and ability to repay).
Credit Card Provider
You want to choose a card from a reputable, accessible provider with good customer service. Look up some reviews online. Don’t just pick the bank you’re with but be open to great deals with other providers that might even be better than what your bank has to offer. Remember, not all the banks are equal – some banks are better at balance transfers.
Putting it All Together…
So by now you’re getting a bit of a profile together of the type of card that would best suit you and you’re thereby narrowing your search. You’ve now got the data to select the options you want.
We’ve got two tools that can help you narrow your search from here. The first is our search tool, which you’ll find on the left hand side of the home page and any category page. Enter in what you’re after and we’ll bring up the cards that best match your search. It’s then your turn to browse and look at the finer details of each card to pick the card with the best balance transfer deal and overall benefits for you! Secondly, if there’s a card you really like you can always pop it into Beat My Card, a unique tool to help you find the card that will save you the most money based on your spending profile.
For an even more in depth advice, visit the Credit Card Compare Learning Center where you’ll find our mammoth balance transfer guide.
Remember to prioritise the features that you’re looking for. In this case a good balance transfer deal that suits your needs is number one. Keep in mind that you can’t usually transfer a balance from one card to another within the same bank and that missed or late payments may cause you to lose that great balance transfer deal you worked so hard to get!
Happy hunting and we hope you find a great balance transfer card that will help you get your debt down fast! Debt free is where you want to be!