Balance transfer offers on CCs, especially 28 degrees

Janko on 29/01/2014 - 01:33
Last edited 29/01/2014 - 01:49

Just got a 28 degree card as I might not be able to pay my other credit card off in full over the next 6 months. Threw all the paperwork out before realising 28 degrees don't have it in PDF form on their site.

So is this how balance transfers work?:

28 degrees have balance transfer 5% rate for 6 months.

If I transfer $1000 over on day 1, interest immediately starts accruing on that $1000 at the 5% pa rate.

A month later the interest is added to the $1000.

That interest will start accruing interest on it at the full 21% rate.

Let's say I make $200 of purchases in that first month.

When the minimum payment is due, let's say I pay off $300.

It is applied first to the $200 spent during the month and the interest, then the remainder off the $1000 balance transfer.

Because the balance hasn't been paid in full, I lose my (up to) 55 day interest free period on the purchases during the month, as well as all future purchases until everything is paid off.

Financial

Comments

  • ozhunter on 29/01/2014 - 01:54
    +1

    This thread should help a little bit https://www.ozbargain.com.au/node/131359

    Credit card providers will be required to direct repayments to the most expensive part of your credit card debt first…

    http://www.bankingreforms.gov.au/content/Content.aspx?doc=fu…

    When you pay off your credit card, it should go towards the amount with the highest interest rate, I haven't tried it with the 28degrees card though. If you have had a balance transferred to the 28degrees credit card, you have already lost your 55 interest-free days.

    • Janko on 29/01/2014 - 08:03

      So best keep daily purchases on the previous credit card and transfer the balance across each month when its due I take it.

      Now I see why some banks make you close the the card the balance is coming from.

      • hys on 29/01/2014 - 10:12

        http://www.youtube.com/watch?v=A5sMvwCFv7s

        This can be the start of a problem ..

        If I transfer $1000 over on day 1, interest immediately starts accruing on that $1000 at the 5% pa rate.

        Yes interest is usually accrued from day 1 that the BT is approved

        A month later the interest is added to the $1000.

        Interest is calculated at each statement cycle

        That interest will start accruing interest on it at the full 21% rate.

        No, the full rate will apply to new transactions and from the end of your promotional rate (6 months)

        Let's say I make $200 of purchases in that first month.

        This will be charged at the full rate

        When the minimum payment is due, let's say I pay off $300.
        It is applied first to the $200 spent during the month and the interest, then the remainder off the $1000 balance transfer.

        Payments will apply to balance transfers first, so you will still be charged the full rate on that $200 purchase you made

  • Domingo on 29/01/2014 - 07:16
    +1

    I just applied for a Citibank card this week and it had options for doing a balance transfer from another CC as part of applying for the card.

  • 00 on 04/02/2014 - 13:45

    NAB have 0% for 15 months with a $30 annual fee on the "Low Fee Card"
    http://www.nab.com.au/personal/credit-cards/compare-credit-c…

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