One reason to apply for a new credit card is to increase your spending power. There’s another common reason behind new credit card applications though — balance transfers. If you’re interested in saving money on the interest you pay on your existing credit cards, balance transfer credit cards might be a good option for you.

Let’s explore what balance transfer credit cards are, how they work, and share a few examples so you can get a better feel for the kinds of terms they can provide.

The Basics of Balance Transfer Credit Cards

A balance transfer credit card can actually fall under any other credit card category as well. For example low interest cards, rewards cards, and no annual fee credit cards can all also be balance transfer cards. All that matters is whether or not there’s a special balance transfer offer available.

A balance transfer is just the act of moving your existing balance from one credit card to another. You essentially “pay off” the old card with the new one, and the resulting balance falls under the new card’s terms and conditions. Balance transfers are often initiated because the balance transfer rate is lower than the cardholder’s existing interest rate. It helps you save money as you pay off your balance.

How Balance Transfer Credit Cards Work

We already touched on the basics of balance transfers, but let’s take a closer look at how balance transfer cards work. It starts with an existing balance on one of your credit cards. For example, let’s say you have a $1000 balance on a credit card charging 17% interest. You want to work on paying down that balance, but because of the high interest rate you feel like you take two steps forward, one step back with every payment you make.

So you decide to get a balance transfer. You would compare balance transfer offers on new credit cards. A few of these offer special low balance transfer rates for the life of your balance, but most are introductory offers. Let’s say you choose a card with a 9 month balance transfer rate of just 1.9%. That means you have 9 months to pay off that $1000 balance before the new card’s higher interest rate would apply. The higher rate for some cards is their purchase rate, while others charge an even steeper cash advance rate on balance transfers after the introductory period.

In general the idea is to get a card with a special balance transfer period that will give you time to pay off your balance in full before it expires. So if you need more than 9 months to pay off that $1000 balance, you might look for a 12 month or lifetime balance transfer offer instead. Some balance transfer rates are as low as 0%.

Examples of Balance Transfer Credit Cards

Here are some examples of credit cards with balance transfer offers that you might be interested in comparing.

1.    HSBC Credit Card
2.    ANZ Balance Credit Card
3.    Citibank Gold Credit Card

Browse CreditCardOffers.com.au to find more current balance transfer offers available, and start saving money today.