Can I balance transfer a personal loan to a credit card?

What are the benefits of transferring a personal loan balance to a credit card?

• Save money. Balance transfer credit cards give you the chance to save money on interest charges, by offering a low or 0% introductory interest rate.
• Pay off your personal loan debt faster. Paying low or no interest on a balance transfer card means more from your repayments goes directly towards the principal debt (rather than interest charges), which gives you a chance to pay off your debt in a shorter amount of time.
• Longer balance transfer offers. Balance transfer credit cards offer introductory interest rates for up to 12 months. Depending on the amount of debt you owe and the repayments you can afford to make, you may be able to pay off your personal loan debt before this period ends, avoiding higher interest charges in the process.
• Pay off all your debts at once. If you’re dealing with several debts, you may be able to consolidate them onto one credit card, so you only need to make one repayment each month. Plus, you just have to deal with one interest rate for all of your debt.

How can I make sure I’m eligible to transfer my personal loan to a credit card?

The requirements you need to meet may vary between cards, but usually include the following:

• Meet the credit card application criteria. You need to meet the eligibility criteria for the specific credit card you apply for, including the minimum age, residency status, credit score requirements and minimum income conditions.
• Transfer from an eligible bank. You can only balance transfer existing debt if it is from a different New Zealand financial institution to the one with which you’re applying. For example, you can’t transfer a Westpac personal loan debt to a Westpac credit card. Also, the debt you transfer must be in the name of the primary account holder for the new credit card.
• Ensure the debt meets the balance transfer limit. There may be minimum and maximum limits for your balance transfer. For example, with Westpac you can transfer up to 95% of your credit limit. This means if you were approved for a Westpac balance transfer credit card with a $10,000 limit, you could balance transfer up to $9,500 to the account.

How to apply for a personal loan balance transfer with Westpac

Westpac allows you to balance transfer debt(s) from a personal loan, another bank’s credit card, store cards or hire purchase agreements to a Westpac credit card. If you meet the eligibility requirements, you can transfer your personal loan balance to a Westpac credit card by following these steps:

1. Find a card. Compare the range of Westpac credit cards and choose one that best suits your needs.
2. Apply. Click “Go to site” on this page to be taken to a secure online application page.
3. Fill out the application. You will need to provide the details of your balance transfer request and the following details:
   • The account holder’s name
   • The type of account or card (ie, personal loan)
   • The account number. For a personal loan, this is the bank number from which you make repayments.
   • The amount of debt you wish to transfer
   • The name of the issuing organisation
4. Submit your application. If you’re approved, your new provider will issue your credit card within 10 working days.
5. Activate. Activate the card so that Westpac can begin the balance transfer process. This may take another 10 working days.
6. Confirmation. Wait for confirmation that the balance transfer is complete, then close your personal loan account. Make sure you pay any fees that may apply, for ending the loan term early or paying out the debt. These costs depend on the personal loan you had, so make sure you check the Product Disclosure Statement (PDS) and factor in the additional charges before you continue with this process.
7. Repay. Start making payments to your Westpac credit card. If possible, aim to pay off the debt before the end of the introductory period so you can avoid higher interest charges when the revert rate kicks in.

What should I be wary of when I balance transfer my debt?

• The revert rate. At the end of the introductory period, the low promotional interest rate for balance transfers will revert to standard purchase rate or cash advance rate. Westpac applies the standard purchase rate of interest to the balance that remains after the introductory period. Check specific cards for more details and aim to pay off your balance before this rate applies.
• Making purchases during a balance transfer offer. With Westpac, the payments you make to your card are applied to the balance transfer before cash advances or other purchases until it is paid in full, but this is after charges and interest that has accrued.
• Balance transfer fees. Please note, some credit cards charge a one-off fee for processing balance transfers. This fee may depend on the balance transfer offer and the card.

With competitive low or 0% introductory interest rate offers, balance transfer credit cards present an opportunity to save money on interest charges and pay off existing debt faster. Now that you know the credit cards that allow you to balance transfer personal loan debt, you can compare options and find one that suits your needs.

Pictures: Shutterstock

Frequently asked questions about balance transferring a personal loan to a credit card

• I want to consolidate my debts. Is it better to use a debt consolidation loan or a balance transfer credit card?

  The type of account you use for debt consolidation depends on your circumstances. However, you may want to note that debt consolidation loans generally provide a fixed-interest rate that applies from the time the loan is approved. Balance transfer credit cards, on the other hand, provide a low or 0% introductory interest rate before standard rates are applied, which can give you an interest-free period. Consider comparing a range of loan and credit card options to find one that suits your personal circumstances.

• Does the promotional rate end if I miss making a repayment?

  No. If you miss a repayment, your provider will charge you a late payment fee. Your promotional rate will continue to run until its expiration date.

• If I transfer my personal loan to a credit card, is the debt considered a personal loan debt or a credit card debt?

  If you successfully balance transfer your personal loan to a credit card, that debt is considered a credit card debt.

Pictures: Shutterstock