Is a Balance Transfer Card The Best Option for Me?

mooie on 05/02/2024 - 19:01
Last edited 05/02/2024 - 21:00 by 1 other user

Hey Everyone!

FWIW - These types of financial decisions usually make me quite stressed, hence I appreciate any great feedback.

I currently have a Credit Card with CBA, that I got 11m ago on a 0% PA for 12m Offer. So naturally, the time has come and in a months time I'll be having to start paying the interest rate. It's a $10k limit, and has $5k balance. I will not be able to pay off this balance by the end of the month, and I really don't want to be paying the interest rate.

So I did my reseach (OzBargain Credit Card Guide is actually the best source - actually makes sense), and I think getting a Balance Transfer Card is what will help me.

So please correct me if I'm wrong, but if I apply for this card Westpac Low Rate Card 0% p.a. for 28 months on balance transfers, for like $6k, then I should be able to pay off the $5k CBA balance, and close the account?

Can someone help me explain what repercussions I could face here? Like obviously I still have $5k Balance with Westpac, but I am reasonably confident in paying that off quickly. I had the card at around $0 towards the end of last year, but Christmas is always a really hard time for families! And even if I don't have the balance paid off right away, I have 28 months? But this card is only 0% for the one Time Transfer, not regular transactions?

For context, the reason I picked the Westpac card is because I am already with Westpac too for transactional account, and I feel that it would just be way easier?

TIA - I appreciate your help!

Financial Credit Card

closed Comments

  • brendanm on 05/02/2024 - 19:05
    +5

    I highly suggest not living on credit. If Christmas cost you $5k, and you can't pay it off, you are doing it wrong.

    However, a balance transfer to 0% interest is the best thing to do, then pay it down, stop putting things on credit.

  • WreckTangle on 05/02/2024 - 19:19
    +1

    Try no credit card, i recommend it!

  • AndyC1 on 05/02/2024 - 20:02

    Where is the poll?

  • randomusername2017 on 05/02/2024 - 20:06

    This sounds like a recipe for disaster based on :

    • will not be able to pay off this balance by the end of the month
    • but Christmas is always a really hard time for families
    • reasonably confident in paying that off quickly.
    • But this card is only 0% for the 1 Time Transfer, not regular transactions?

    To get the best value from a BT you'd need to avoid additional purchases.
    Watch out for BT fees(1-3%)
    Do you have the capacity to service 16k of CC debt, as the original limit will be factored in to the new application.

  • KaTst3R on 05/02/2024 - 21:23
    -1

    Better read the ** properly.

    There is a mandatory monthly payment to be entitled interest free period. I assume the moment you dont fully pay the monthly amount, interest kicks in straight away and end the promotion. There will be some pitfalls that you have to be aware of.

  • Drakesy on 06/02/2024 - 00:48

    The only credit card you should be taking out is one to acquire points and pay off in full every month.
    Else stick with debit cards.
    Unfortunately this can be the start of a debt snowball.
    Definitely concentrate on getting another balance transfer card AND PAY IT OFF THIS TIME.

  • Youfah Mizzum on 06/02/2024 - 08:40
    +1

    Good responses so far but none address your exact questions.

    1. The 28 months 0% is ONLY on the transferred amount. So you will have 28 months to pay off your $5000
    2. Once this has been paid off, yes you can just close the account

    3. Any purchases made on the card attract interest after the 55 days interest free period. What does this mean? It means that you have a grace period without interest from the date of purchase.
      In other words, PAY OFF YOUR FULL BALANCE EACH MONTH!! That way you don't pay any interest. At all. This applies to any and all credit cards.

    4. What repercussions? Your credit limit (i.e the maximum amount your allowed to have outstanding on your card) is taken into account when applying for loans, other cards, etc.
      If you use this purely as a method to pay off your CBA card, DON'T USE IT FOR PURCHASES! Otherwise you'll be in over your head again.

    I recommend setting up a regular payment from your normal transaction account, say $1000 per month and just forget you have this new card. Then set a calendar reminder in 5 months time to remind yourself to check and close the account.

    Like others have said, you need to seriously think about your spending and usage of credit. If you can't pay off $5000 from Xmas then either you're spending too much or your income can't support having a credit card.
    But you're on the right track to balance transfer to a new card with 0%.

  • mrkorrupt on 06/02/2024 - 08:57

    —-> but Christmas is always a really hard time for families!

    This is not true, there is no obligation on you to make it any special then any other time of year unless you are the one that chooses and the fact that you admit to overspending and living beyond your means with lingering debt means that you either
    * are trying to use that money to please people at the cost of your financial wellbeing (people pleaser)
    * have little or no financial responsibility and do not spend within your budget

    also there are beliefs that do not require you to spend big at christmas, investigate them

  • payless69 on 06/02/2024 - 10:19

    The Amex no limit card perhaps suits if your BMW is black!

  • Drpepper666 on 06/02/2024 - 11:08

    Just keep balance transferring forever. It's literally free money.

  • Untalentedllama on 07/02/2024 - 09:54

    Keep in mind that Westpac only allows you to balance transfer up to 80% of your credit limit. I also didn't read thoroughly but check if there's a balance transfer fee to establish the BT (some banks charge a % to set it up).

    Also as others have mentioned you will pretty much be locking yourself out of using the card for transactions after doing a balance transfer, as any transactions you make will automatically accrue interest unless paid off immediately

    Otherwise happy debt cycling (but do make sure you have and you stick to your plan to pay it off)!

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