The credit crisis continues to hit the world economy, the decline of the U.S has had a detrimental effect that has snow balled all the way to the south pacific region. Experts predict that Australia will feel the effects of this epidemic for some years to come (With exception of Western Australia due to the mining boom). The question is what effect will the slow moving economy have on credit card interest rates? The answer to this question will come with time, for the everyday Australian fingers are crossed that credit card rates will not rise.

If you are one of those Australians that got stuck with signing up to a high interest credit card there are options for you to get out of this money trap. Balance transfer credit cards are giving consumers the opportunity to transfer debt from current credit cards to a new low rate credit card (If you do your research and compare) with a low interest period where you can pay your old credit card debt off, potentially saving you hundreds of dollars. 2011 is the era of balance transfer credit card offers, banks and credit providers are competing for your business. This competition means that balance transfer credit card promotions are popping up every other day. If you play your cards right, do your research and compare as many credit card deals as possible you are in the drivers seat for getting a suitable offer that caters for your needs.

To ensure the maximum benefits from a balance transfer credit card offer it is of vital importance that you read the fine print. Not paying the outstanding balance from a balance transfer will mean that you will pay with a cash advance interest rate (Normally over 20%). It goes with out saying that paying off your old credit card debt should be a priority when considering a balance transfer credit card promotion.

Shop around and you are bound to find a lower rate credit card deal that provides a balance transfer promotion, allowing you to save on your current credit card debt. However as Credit Card City always recommends, seek the guidance of a qualified financial adviser before making any decision on your personal finances.

Is a balance transfer right for you?

A quick guide to help make a balance transfer credit card work for you

A balance transfer credit card allows you to transfer the debt from your old credit card to a new credit card offer. The new credit card gives you a grace period, where you can pay back the debt, ranging from little to no interest at all.

Jack’s credit card balance transfer story

Current owing on old credit cards – $3,000 at 19.99% p.a and $2000 at 17%p.a

New credit card offer -  0% for 6 months on balance transfers

The resulting transaction – the new credit card company pays the old credit card the outstanding amounts of $3,000 and $2,000

You end up with – a debt of $5000 owing to the new credit card company at 0% for 6 months.

Other perks – if you do your research the new credit card offer can come with a lower interest rate of around 12%p.a on future purchases you make on the card.

What to look out for – be sure to pay off the outstanding debt within the balance transfer time frame.  If you don’t then you will have to pay a cash advance interest rate on the outstanding amount. On average this is over 20% p.a

Choosing the best balance transfer deal for you

There are many balance transfer credit cards going around today, making the task of choosing the best card for you a difficult one. In Australia balance transfers can come with a grace period ranging from 6 to 12 months, some credit cards even offer a period of “life” to pay back the debt. Interest rates on the repayment options typically range from 0%p.a to 4.99%. Compare balance transfer rates and time periods here.