Best-value Balance Transfer Credit Cards

GOLD WINNERS BANK BANK OF MELBOURNE NON-BANK CUA You can cut the amount of interest you pay by switching cards, but you need to be disciplined in making the repayments

Comparison website RateCity, in its analysis of Reserve Bank data, estimates that Australians paid $6.91 billion off their credit cards between the start of Covid-19 and the end of September 2020.

Not only are we paying off our credit cards, we’re also switching to other forms of payment. RateCity says the RBA data shows there were 654,202 fewer credit card accounts open in September than in March.

Sally Tindall, research director at RateCity, says it was good to see so many Australians paying down their debt during the pandemic. However, “the pace at which we’re clearing our debt has started to slow” and credit card spending rose in September as people were “clearly out shopping more”.

The question, she says, is whether people will continue to be diligent in paying down their debts.

“With Christmas [on our doorstep], some people will be tempted to give their card a workout at the shops,” she says.

“If you’ve focused all year on clearing your credit card debt, try and resist the temptation to blow the budget this Christmas. Otherwise you could find yourself back to square one in the new year, struggling to pay down high-interest debt.”

And this awards category is all about managing your debt. Balance transfers can be a handy way to manage mounting credit card debt, allowing you to shift it from one card to a second card with a lower rate.

But beware – if you don’t pay off the debt on the transfer card within the low-rate period, you’ll be slugged with a punishing interest rate.

Products in this category were assessed by what it would cost to have $5000 revolving credit over two years, including the impact of introductory rates, and where the account incurs one missed payment and one $100 cash advance per year, as well as yearly overseas transactions of $500.

Sharing the top spot on the podium are the Bank of Melbourne Vertigo Visa among the banks and the Credit Union Australia (CUA) Low Rate Credit Card among the non-banks.

The Bank of Melbourne card offers users 0%pa on purchases for seven months, 0%pa for 22 months on balance transfers, no annual card fee for the first year and a 13.99% variable rate on purchases.

CUA’s Low Rate Credit Card also waives the fee for the first year, but has 0% balance transfer for 20 months and 11.99%pa on purchases.