57% of Aussies are not aware of these balance transfer fees

Published on June 15th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Balance transfer fees aussies are not aware of

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Balance transfer credit cards have become the go-to card for Aussies that want to consolidate their debts under one interest rate, making it easier and affordable to pay off their debt. However, there are three common fees that many cardholders tend to overlook that can end up landing them in more trouble than before.

Overlooked revert rates

Balance transfer credit cards offer enticing deals such as a 0% interest rate for a promotional period to help cardholders reduce debt. It can also be used to make those important purchases without attracting an interest rate. Depending on the bank issuer, cardholders can transfer 70% to 100% of the debt and choose a comfortable time frame in which they know they will pay off what they owe.

However, a survey by SocietyOne revealed that 65% of Aussies overlooked the revert rate fee that comes with the card. This is the interest rate the card reverts to after the introductory period has ended. This differs from card to card and can range from 6 to 26 months. For example, once the promotional 0% interest rate has ended the card can revert to 21.49%.

Balance transfer fees

The survey further found that 57% of respondents were not aware of the balance transfer fee that they might have to pay. There are various balance transfer cards that are on the market that come with various features. Some of these having a 2% balance transfer fee.

Not keeping this in mind when taking out a credit card can affect your budget or plans on effectively using the card. A 2% balance transfer can mark the difference in whether you can comfortably afford your cards repayments or find yourself being pushed into the red.

Interest charged on new spending

A balance transfer card can help take care of your existing debt, but be careful not to add to the list. 57% of cardholders were unaware that they will be charged interest on new spending placed on the card. By reading the fine print of what comes with the card can help you avoid the shock when your credit card bill comes.

24% of Aussies that had a balance transfer credit card did not pay off their balance within the interest-free period. Not taking advantage of the interest-free period can cause cardholders to attract a hefty fee that could easily lead them into a debt spiral. It is important to only put important purchases on the card and use the interest-free period to pay it off to avoid attracting a hefty fee that can land you in hot water.

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