balance transfer charges

Credit cards accepting balance transfers can be a great deal, but make sure you understand the terms and conditions that apply.

Low or zero interest rate deals on balance transfers typically apply for 6-12 months and you may have to pay a transfer fee of typically 2-3 per cent of the balance transferred.

Also remember that if you only make part payment of your monthly bill, the card provider may use this money to pay off other items first (see list below).

This is because card issuers typically apply payments in the following order of priority (but you should check the terms and conditions of each card as terms may vary):

  1. 1. Insurance premiums (for payment protection insurance)
  2. 2. Interest
  3. 3. Charges or fees (for foreign exchange transactions, missing payments, copy statements etc)
  4. 4. Balance transfers and promotional transactions (those with the lowest rates of interest first)
  5. 5. Retail purchases
  6. 6. Cash transactions (highest interest charged)