How Credit Card Balance Transfers Work

By the Aussie Credit Guide editorial team · Reviewed 5 October 2026

A balance transfer moves debt from one credit card to a new card with a low or 0% rate for a fixed period. It reduces interest only if the debt is paid down before that period ends.

The steps

1. You apply for a new card and request the transfer, usually as part of the application.
2. If approved, the new provider pays the amount to your old card.
3. The debt now sits on the new card at the promotional rate for the offer period.
4. When the period ends, anything left moves to a higher rate.

What it costs

The transfer fee

Moneysmart describes a one-off balance transfer fee, calculated as a percentage of the amount transferred. At 3%, moving $5,000 adds $150 to the new card on day one.

The revert rate

Whatever remains at the end of the offer attracts interest at the revert rate. On many cards this is the cash advance rate, which is higher than the purchase rate. Our balance transfer comparison shows the revert rate for each card.

The annual fee

A card fee still applies during the 0% period unless the card has none.

Working out the repayment

Add the transfer fee to the balance and divide by the number of months. For $5,000 at a 3% fee over 24 months, that is $5,150 ÷ 24, or about $215 a month. Paying only the minimum will leave most of the debt in place when the higher rate begins.

Things that catch people out

• New purchases. Spending on the new card is charged at the purchase rate, and interest-free days on purchases often don’t apply until the transferred balance is repaid.
• Transfer limits. The amount you can move is capped, sometimes at a percentage of the new card’s limit. Moneysmart gives 80% as an example. Anything not transferred stays on the old card at its usual rate.
• The old card. Unless it is closed, it remains available to spend on. Moneysmart’s guidance is to cancel the old card.
• Repeat applications. Each application is recorded on your credit report. See credit scores.
• Same-bank transfers. Providers generally don’t accept transfers from their own cards or those of related brands.

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