If you’re tired of paying high interest rates on your credit card balances, you might have considered initiating a balance transfer — moving your balance to a low interest card. After all, introductory balance transfer rates can be very attractive. You may even find a new credit card that offers 0% interest on balance transfers for a few months, like the ANZ Low Rate MasterCard which offers 0% interest on balance transfers for six months.

Balance transfer credit cards can help you save money, but it’s important that you read the fine print before applying for a new credit card. If you do, chances are good that you’ll see another limit in place on balance transfers.

A Common Misconception

When comparing balance transfer credit cards, you probably looked at the balance transfer rate and any special introductory offers. But did you know that when you apply for your balance transfer is just as important?

It’s not uncommon for consumers to think a special, like the Citibank Silver credit card’s 12 month 2.9% balance transfer rate, begins and ends with the balance transfer itself. Instead, if you read the terms and conditions you’ll likely find that introductory period begins when your credit card application is approved (even if you don’t initiate a balance transfer for several months).

In other words, if you apply for a credit card with a special six month balance transfer rate in January (and are approved), your introductory rate will expire six months later. If you don’t initiate a balance transfer until May, you’ll only enjoy that special rate for a month or two before it expires.

The Solution

The last thing you want is to transfer a large balance a few months down the road only to discover you’re going to be stuck paying high interest sooner than you expected. In that case, why bother switching credit cards at all?

To get the most from a balance transfer card, it’s generally a smart idea to apply for your balance transfer when you apply for the credit card. It’s the easiest way to maximise your 0% interest (or low interest) period for paying off larger balances.

If you know up front that you likely won’t transfer your balance immediately, either wait to apply for a balance transfer card (you’ll still find good introductory deals later) or choose a credit card with a long introductory period, giving you ample time to apply for and pay off your balance transfer. The BankWest Lite credit card, for example, offers a low 4.99% interest on balance transfers for a 15 month period. In that case, even if you wait a few months before applying for the transfer, you’ll still have plenty of time to enjoy the lower rate.

Why is it so important to apply for a balance transfer early? If you don’t, you’ll pay more interest in the long run. That doesn’t mean that you’ll pay the card’s purchase rate either. Some credit cards will revert balance transfer rate to the cash advance rate when the introductory period expires (the highest interest rate on a card). Don’t get caught by surprise. Always review the credit card terms carefully before applying, and initiate balance transfers early to get the best deals.