0% Balance Transfer Credit Cards

Updated 11 August 2020

Choosing a card with a 0% balance transfer offer allows you to transfer a balance from another credit card or store card to save on interest over an introductory period. Usually offered over a period of three to twelve months, an offer such as this can give you a break from interest, allowing you to pay off more of what you owe, to clear your balance faster.

How does a 0% balance transfer offer work?

Once you’ve found the 0% balance transfer card for you, you will need to complete the application online, providing details of the balance you want to transfer. On approval, your new card provider will arrange the transfer, so you can work on paying it off. It’s up to you to close the old account. Once the intro period is over, any balance left unpaid will revert to the rate stated by the provider.

Balance Transfer Rate: With a 0% balance transfer offer, the balance transfer rate is 0% p.a. This means you pay 0% p.a. interest on your transferred balance throughout the intro period.

Introductory Period: This is the period of time your transferred balance will attract the introductory balance transfer rate. Depending on the offer, this may range from 3-12 months.

Revert Rate: This is the rate of interest that will be applied to any balance remaining after the introductory period. It is usually the card’s standard purchase rate or cash advance rate.

Balance Transfer Limit: Card providers may limit the amount that can be transferred onto the new card. This is usually expressed as a percentage of the cardholder’s approved credit limit, for example, 95%.

Interest Free Period: Cards that offer an interest free period on purchases (i.e. up to 44 days interest free), typically withdraw this until the balance transfer is paid off. That means any new spending will attract interest from the date of the transaction.

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Why choose a 0% balance transfer offer?

While the number of 0% balance transfer offers available will change according to the credit card market, you will usually have a few to choose from as long as you meet eligibility requirements. So, why should you choose a 0% balance transfer offer?

Consolidate Your Credit Card Debt

If you have a number of credit cards and store cards, keeping up with them all can get tricky. Unless you’re super organised – and great at budgeting – you may find it difficult to keep on top of all their different payment dates, while avoiding overspending on all that available credit. A solution could be to apply for a card with a 0% balance transfer offer.

By transferring the balance from all your credit cards and store cards onto one balance transfer card, you can consolidate your debt. Closing all your old accounts, you can then focus on your new card to pay down the balance over the introductory period. This should be easier to do, as you will be paying nothing in interest thanks to the 0% offer.

Pay Off A Large Purchase

With a bit of planning, you can use an interest free credit card with a 0% purchase offer to cover large purchases, and then pay them off over the intro period while paying no interest. But, if you were unable to find a 0% purchase offer, or you had to cover a large purchase before you had the chance to apply, you may have a lump sum sitting on your current credit card, stacking up heaps of interest.

Switching to a 0% balance transfer card could provide an alternative. By transferring that sum to a card with a 0% balance transfer offer, you could work on paying it off over the intro period, while paying nothing in interest.

Save On Interest

Obviously, the biggest attraction of the 0% balance transfer offer is the opportunity it provides to save on interest. If you currently have a balance on your credit card that will take time to pay off, you may benefit from transferring it onto a card with a 0% balance transfer offer. Instead of paying a much higher rate of interest on your balance, you will pay zip in interest on it throughout the intro period.

Clear Your Balance Faster

Sick of having a balance on your credit cards or store cards? Having credit card debt can get you down – especially when you’re paying heaps of interest, so it seems like you never make a dent in it. With a 0% balance transfer offer, you will pay no interest on that transferred balance, so you can keep chipping away at what you actually owe, instead of just paying off accruing interest.

Switch To A More Suitable Card

Whether your needs as a cardholder have changed, or you simply picked the wrong credit card when you first applied, a 0% balance transfer offer can allow you to pay off that old card, to switch to a card that better suits your needs. You can then clear your balance faster thanks to the offer, close the old accounts, and start fresh with your new, more suitable card.

What should you do to make the most of a 0% balance transfer offer?

Check Your Eligibility

To avoid any black marks on your credit file, it’s best to check eligibility requirements on each card before you apply. This means making sure you meet eligibility requirements for the card (for example, minimum annual income and credit worthiness), as well as eligibility for the offer (which cards you can transfer from, how much you can transfer, and so on).

Choose An Offer That Suits You

Introductory periods vary according to the provider and the credit card market. Be sure to choose an offer that gives you enough time to pay off your transferred balance within the time provided.

Commit To A Repayment Plan

Balance transfers are not something to arrange and then forget about. To make them work, create a budget to calculate how much you will need to pay off each month to clear your balance within the intro period. Setting automatic payments after each payday can help.

Ready to save? Check out the range of 0% balance transfer offers here on CreditCard.co.nz and apply today.

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