Clear your existing credit card debt without paying interest or an annual fee. Find out which card will save you the most money today.
If you’re carrying debt on an existing credit card, chances are you’re also being bled dry by the compounding interest fees on your account. A high-interest rate can trap you in debt for far longer than desirable, and if you repay it over an extended period, you could even end up paying more money in interest fees than the principal loan amount.
A balance transfer credit card can come in handy in this situation, as it creates the breathing space you need to pay off the debt without interest penalties. An annual fee waiver only sweetens the deal and maximises your savings. The money you save, if put towards repaying the debt, also means you can achieve debt freedom sooner! Read on to learn all you need to know about getting a new $0 annual fee and 0% balance transfer credit card.
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What is a credit card with a $0 annual fee and 0% balance transfer
This card is designed to allow you to pay off your credit card balance without extra interest costs or an annual fee. It essentially enables you to transfer existing credit card debt from one or more cards onto a new card, where you can enjoy 0% interest on the loan for a specified promotional period, usually between 6 and 12 months. Some cards offer $0 annual fees for life, while others waive it for a promotional period. A balance transfer fee may also apply (typically between 1% and 3% of the debt amount), but you can offset this by your interest and annual fee savings.
How to compare credit cards with $0 annual fee and 0% balance transfer
You should always research the various offers available before deciding on a card. When it comes to comparing cards, these are the significant factors to consider:
- Annual fee waiver. Some cards offer an annual fee waiver for the entire life of the card, while others only waive it for a promotional period. In the latter case, you should know when the annual fee will kick in (for example, in the second or third year) and how much it will cost from then on.
- Balance transfer period. Consider the length of the promotional offer (such as 0% interest for 6 months vs 0% interest for 12 months), because the interest fees you save over an extended period can be substantial. Make sure you can repay your entire balance before the promotional period ends; otherwise the remaining balance will collect the revert interest rate.
- Revert rate. The revert rate is typically the high-interest purchase or cash advance rate that kicks in once the promotional period ends. This is particularly important if you’re uncertain you can clear the full debt within the promotional period.
- Balance transfer fee. This is a one-time fee that you may have to pay to move the balance over to the new card. There are credit cards that omit this fee, but some cards charge up to 3% of the balance transfer amount, which could mean a fee of $300 on a $10,000 debt. This is usually a small amount compared to the interest fees you will save, but you need to factor it in nonetheless.
- Balance transfer amount. Some credit cards allow you balance transfer up to 100% of your new credit card limit, while others may impose a balance transfer limit. For example, some may only let you transfer a balance up to 90% of the limit on your new credit card. This is important if your existing debt is considerable and you’re not sure what your new approved credit limit will be.
- Purchase rate. This is the interest rate for new purchases made on the card. Be careful about making new purchases on your balance transfer credit card because you are not eligible for interest-free days when carrying an outstanding balance. All repayments usually go directly to purchases, if it’s collecting the higher interest rate.
- Cash advance rate. Cash advances, such as ATM withdrawals, usually carry a higher interest rate of around 22% to 23%. Cash advances collect interest immediately and often incur a cash advance fee too, so you might want to avoid them if you’re trying to save on interest and consolidate your debt.
- Other features. Consider other card features like the complimentary extras on offer, as well as the ability to earn rewards on the card. Complimentary extras often include travel insurance cover and purchase protection policies. While you shouldn’t be using the card to make purchases or earn reward points while paying off a balance transfer, these features may be of interest if you plan to continue using the card after you repay the debt.
How to apply for a credit card with no annual fee and 0% balance transfer
Once you compare the options and decide which card you want, you can apply online. This can take just minutes if you have all the necessary information and documents ready, but more importantly, you must meet the card’s eligibility criteria to apply successfully:
- Age. You must be at least 18 years old to apply.
- Residential status. You must be a New Zealand citizen or permanent resident, although some credit cards allow certain visa holders to apply.
- Annual income. Each credit card stipulates its annual income requirement, typically starting from $15,000 p.a. upward. Make sure you satisfy this requirement before applying.
- Credit history. You must usually have a clean credit history and a good or very good credit score to be successful in an application.
Necessary information and documents
- Proof of identification. You need to provide a copy of your driver’s licence, passport or another form of ID, eg 18+ card.
- Financial information. The application form will ask for financial details, and you may also require bank statements and other financial documents.
- Employment details. You’ll be asked to provide details of your current and previous employment, as well as your employer’s contact details. You will also need to provide recent payslips and sometimes your employment contract. If self-employed, you usually need to supply an individual income return assessment and other proof of income.
- Assets, liabilities and expenses. The application will ask for details of your assets, liabilities and costs, and you may need to present proof of listed assets and liabilities.
- Credit limit and balance transfer. The application will also ask for your desired credit limit and the requested amount of your balance transfer. You need to provide the account details of your current credit card(s) from which you wish to transfer your balance(s).
When choosing a new $0 annual fee and 0% balance transfer credit card, it is advisable to plan a strict repayment schedule to ensure you can successfully pay off the full debt within the promotional period offered by the card. Make sure the savings on the new card outweigh all possible future fees, so the balance transfer ultimately proves worthwhile. Once the provider approves your new card, start chipping away at that old debt without having to worry about interest or annual fees!Back to top