Should I take advantage of 0% p.a. balance transfers, even if I would have no problem paying off my balance?

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  ozhunter on 17/03/2016 - 16:31

  +1

  Yes it's a good idea unless you plan to get a home/car loan in which it may affect the amount you can borrow.

  That card has a $150 fee if you're not a Westpac customer. Overall you could still end up saving money.

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    CyberMurning on 17/03/2016 - 16:50

    +1

    means only $50 profit? not worth it

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    stargalaxy on 17/03/2016 - 16:54

    Can OP just go and open a new bank account with Wespac before applying for the credit card?

    • 

      DChiuch on 17/03/2016 - 16:57

      Yeah, you can do that.

      The bank account has a $5 monthly fee but this is waived because I'm a student.

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  osaya on 17/03/2016 - 16:33

  assuming everything goes smoothly, and you pay off your BT as planned, the main thing to consider is that your credit score/history would indicate that you have applied for more credit during this period. that means if you were planning to have apply for a loan in the near future, it might count against you, because you already owing this much money from these creditors.

  aside from that, just make sure that the "0% BT" has no hidden fees, e.g. application fees, monthly fees or such, that would quickly eat up what you would have gained from your savings interest.

  p.s. if you go ahead with BT, double check if you still need to make the minimum monthly payments during the duration. i got caught out, because i assumed the entire amount was covered until the expiry of the BT period!

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    DChiuch on 17/03/2016 - 17:04

    There's a chance I might want a home loan in 1-2 years, so it's a consideration. If the bad credit is only temporary (ie. I'm seen as owing money while I hold this balance), then that's fine, because I could just pay off the balance early if I needed to apply for more credit. Also, I'd be fine waiting 14 months. It would be a problem though if this bad credit continues beyond the 14 months, and if my file has a bad score as a result even beyond paying off the balance – but I'm not sure if this happens or not.

    As for the fees, thanks for the tip. There's a 1% BT fee applied to the balance, so that's around ~$50, which reduces the profit to around $150. Still sounds worthwhile if I can avoid negative affects.

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      spal on 18/03/2016 - 07:46

      Paying off the balance on the credit card won't help. You will need to close of the card account, otherwise the bank will reduce your repayment capability by an amount which is based on the credit limit on the card. I pay off my card in full on the due date. Bank knows this as I bank with them, still in my repayment capability calculations they made an allowance based on the total credit limit and not the outstanding balance.

      Also apply for multiple credit cards will show up on your account. Some lenders do not consider it as a good sign. The worst I had encountered was NAB. They did 3 credit checks (each person did it as the application moved, and it was getting delayed because the were flood with applications) finally I got sick and went with Westpac, had know issues. On top of all of this NAB was the only lender who asked me questions on number of credit checks.

      TL:DR - Loan repayment capability is impaired by the credit limits on cards. Multiple credit checks are not considered good by some lenders.