Is a balance transfer right for you?

Please note, Heritage is not currently offering new balance transfers.

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. A lower interest rate will not only make your repayments more manageable, but it will also help you to pay off your debt sooner.  With only one credit card to manage, you could also help reduce the effort and fees associated with paying off a number of cards. There’s a number of things to consider before making a decision on whether a balance transfer is the right decision for you.

Interest rates and promotional periods

Depending on the interest rate applicable to your current credit card, you can save money in the short-term with a balance transfer. However, it’s important to understand whether the interest rate you are getting is for a promotional period. If an interest rate is being offered for a promotional period, it means that the interest rate will most likely go up once this period ends.

To find out whether this is relevant to the card you are looking at make sure you check terms and conditions for promotional periods. If you are still unsure, talk to a lender directly to make sure you fully understand how the interest rate works.  

Fees

Balance transfers may have a balance transfer fee, or annual fees. You should 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.

Conditions

You’ll need to consider any conditions associated with doing a balance transfer.

For example, your purchases 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 bank. Once again, if you are unsure about any of the conditions talk to a 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. 

Other debt consolidation options

A balance transfer can help if you are wanting to transfer or consolidate one or a number of cards over to a new bank, and you are reasonably confident that you can repay the balance transfer within the promotional period. If you have other loans, such as a personal loan, or don’t believe that you can repay the balance transfer within the promotional period then there are other options, such as a debt consolidation personal loan.

If you are finding it difficult to manage your debt  talk to a lender you can trust and who can give you appropriate options for your particular situation. 

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