Focus on best balance-transfer credit card deals

CREDIT card customers laden with debt can maximise interest-free periods of more than two years to help quickly shave down their card balance.

With balance-transfer (BT) deals you can transfer your debt from an existing card to a card with little or no interest, taking advantage of an interestfree promotional period.

These cards are popular among people who have struggled to pay their debt.

New analysis from financial comparison website RateCity shows lenders Bank of Melbourne, BankSA, St George Bank, Bankwest and Citi offer BT deals of up to 26 months.

RateCity chief executive officer Paul Marshall said while these deals could be a great way to crush debt, they could also leave customers in a worse financial position.

“A 26-month interest-free period may sound appealing but be conscious that you’ll also likely be paying three years of annual fees,” he said.

“Be aware of the revert interest rate. Once the introductory period ends you’ll be slugged with interest charges as high as 25.99 per cent on your outstanding balance.”

If customers make purchases

MoneysaverHQ editorial | on a BT card it’s unlikely any interest-free days will apply.

Latest Reserve Bank of Australia figures highlight the nation’s serious credit card debt problem.

People owe more than $50.5 billion on plastic and $31.7 billion is accruing interest.

Bank of Melbourne chief executive Michelle Winzer said many of its customers maximised interest-free BT deals to become free of credit card debt.

“Our average balance transfer is around $7000,” she said.

“Around a third of our customers pay off the balance

Anthony Keane during the no-interest period and almost 70 per cent of customers either pay off their balance or move the balance elsewhere.”

RateCity calculations show a customer who transfers $4000 of card debt on to a 26-month interest-free BT card – with an interest rate that reverts to 19.7 per cent – would need to make monthly repayments of at least $212 to wipe the entire debt within this time frame.

Experts suggest cardholders set up automatic direct payments for the BT card to make sure the debt is paid off whenever the customer receives income.

anthony.keane@news.com.au |

Sophie Elsworth sophie.elsworth@news.com.au