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

Westpac is currently the only credit card that lets Kiwis transfer a balance from a personal loan to a credit card. We explain how you can do it, the benefits, and what to be aware of.

How to apply for a personal loan balance transfer with Westpac

Westpac allows you to balance transfer debt(s) from a personal loan (from a different bank), 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. Go to the Westpac balance transfer page, and it takes you through how to apply.
3. Fill out the application. You need to provide the details of your balance transfer request. Typically they require the following details:
   • The account holder’s name
   • The type of account or card (in this case, 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, the new provider, for example, Westpac, issues 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.

The remainder of this guide explains in more detail what you need to know about balance transfer credit cards that accept personal loan debt. It also covers the key factors to consider so you can find the right card to pay off your debt.

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

• Save money. Balance transfer credit cards could give you the chance to save money on interest charges.
• Pay off your personal loan debt faster. Paying no or low 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 period.
• Longer balance transfer offers. Westpac offers 5.95% p.a. interest for the life of the balance and occasionally has 0% interest deals for a limited period. 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 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 from a different New Zealand financial institution to the one you’re applying. In the case of Westpac, 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 new credit card’s primary account holder.
• 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.

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

• 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.

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 when the loan is approved.

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

  No. If you miss a repayment, your provider charges you a late payment fee. Your promotional rate continues 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.

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