How do credit card balance transfers work?

Man banking at home with laptop

A balance transfer can help you to manage your debt by rolling credit card debt from one or more cards over to a new card usually with a lower interest rate. There’s a number of things to consider before deciding whether a balance transfer is the right option for you.

How do balance transfers work?

A balance transfer allows you to take the balance you owe on a credit card and transfer it to a new credit card with a different lender. The transferred balance may have a lower interest rate or a promotional period of 0% interest. For example, at Heritage we currently have a 0% Balance Transfer option for 12 months on our Platinum and Gold Low Rate Credit Cards.

A lower interest rate may help to make your repayments more manageable, and help you to pay off your credit cards sooner. Plus, by combining your credit card balances onto the one credit card, you may reduce the effort and fees associated with paying off a number of credit cards. 

What to consider when choosing a balance transfer

Interest rates and promotional periods

Depending on the interest rate applicable to your current credit cards, you may save money in the short-term with a balance transfer.

However, it’s important to check whether the special balance transfer interest rate you are getting is for a promotional period, such as 6 or 12 months. If an interest rate is being offered for a promotional period, it means the interest rate on your balance transfer amount will most likely go up once this period ends.

You'll also need to check what the interest rate is for making new purchases on your new credit card. If you intend to continue to use the credit card for purchases you'll need to know what interest rate you'll be charged on these and whether you'll get any interest free days. 

Make sure you check terms and conditions for promotional periods before you apply. If you are unsure, talk to a lender directly to make sure you fully understand how the interest rate works.  


Balance transfers may have a balance transfer fee, or annual fees while the balance is outstanding. On top of this, you may also be charged an annual fee for your credit card. This could add up.

So it's important that you understand all fees associated with doing a balance transfer, and compare them with the fees you are paying for your current debts before making a decision. Use our Balance Transfer Calculator to work out whether you'll save money with a Heritage Balance Transfer.


You’ll need to consider any conditions associated with doing a balance transfer. For example some financial institutions may have conditions like:

  • Your purchases on top of your balance transfer may not be eligible for interest free days while you have an outstanding balance transfer during the promotional period
  • You may not be able to pay out an overseas card with a balance transfer, or transfer debts within the same lender.

It's important to understand all of the conditions of the balance transfer before you make a decision. Talk to your lender directly to get a full understanding.

The effect on your credit history

Keep in mind your credit history lists any instances where you have applied for credit, and the outcome of those applications (and any reported defaults on loans). Your credit history can mean the difference between having a loan approved or not. To learn more about what contributes to your credit history, read our article on What is a Credit Report.

Other debt consolidation options

A balance transfer can help if you are wanting to transfer or consolidate one or a number of credit card debts over to a new credit card with a new lender. You'll need to be reasonably confident that you can repay the transferred balances within the promotional period applicable on the new credit card.

If you have other loans, such as a personal loan, or don’t believe that you can repay the transferred balances within the promotional period then there are other options, such as a debt consolidation personal loan.

If you're finding it difficult to manage your debts you can:

  • Visit our help and guidance hub for more information;
  • Talk to a lender you can trust who can give you appropriate options for your particular situation;
  • Obtain independent legal, financial and/or taxation advice; and/or
  • Contact the National Debt Helpline for free financial counselling on 1800 007 007.
Information published 25 November and could change without notice.

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