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How to get on top of your holiday credit card debt


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The festive season is over for another year, and it's time to start getting back into the swing of things, including managing your credit card debt.

Depending on your circumstances, a balance transfer may be what you need to help you get on top of your debt, giving you a stress-free start to 2020.

Why might a balance transfer be a good option?

If your holiday shopping piled up more debt than you can comfortably pay off before interest begins to accrue, a balance transfer can give you the grace period you need to settle your account.

christmas credit card debt

In most cases, the card you are transferring your balance to will advertise the period during which the transfer can be made and the interest-free period. Usually the interest-free period is a window of three or six months; however, some providers offer 12 months.

Balance transfers can also be useful if an emergency prompted a significant purchase, or if you used a high interest card for a particular reason, such as to purchase airline tickets.

You can transfer your balance to take advantage of a promotional interest-free period, and then pay off your debt more comfortably without a penalty.

What should you be aware of before completing a balance transfer?

Many promotions have a limit on the amount that will be considered interest free when making a balance transfer.

However, the card issuer may allow you to transfer more, subject to their own interest rate. Unless the regular rate for the new credit card is lower than the rate for the card you are transferring from, only transfer the amount eligible to be considered interest free.

You should also check the new card's annual fees and any other applicable fees. If fees amount to more than the interest you would pay by leaving the balance on the original credit card, it may not be a good choice for you.

Tips for smart credit card balance transfers

Set a budget to make sure you pay back the debt by the end of the interest-free period, otherwise you'll come to the end of your three or six month window and be right back where you started.

Divide the time you have to pay off your balance at the interest-free rate by the number of paycheques you will receive in that same time frame, and make regular payments like you would with any other bill.

You might also consider closing the card you transferred the balance from, or putting it away where you won't be tempted to use it until you've paid off your transferred balance.

Finally, make sure you do your research to find out which card is right for you. At Bank of Queensland, our Blue Visa Credit Card was recently named Money magazine's Best Reward Credit Card for 2020.

 This article is for general information purposes only and is not intended as professional advice, and has not been prepared with the financial circumstances of any particular person in mind. You should seek your own independent financial, legal and taxation advice before making any decision in relation to the material in this article.


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Andrew Toone joined Bank of Queensland (BOQ) as general manager of product in 2015. He has more than 25 years' experience in banking and insurance, and has held senior leadership roles across actuarial, insurance, wealth, banking, finance, product and pricing functions. Before joining BOQ, Andrew spent 11 years with the NAB Group, where he held senior roles in wealth, corporate and consumer banking. Prior to this, he worked for AXA in the UK, Australia and Asia.
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