When working towards a savings goal, debt stands in the way for many Australians, with an ABS survey revealing Australians are now holding more debt than they are earning income. Tools such as a balance transfer credit card can help you get on top of your debt so you can focus on building up your savings. To help support your savings goals it can be helpful to consider the tools that may be available to help bolster your existing savings account.
When looking to reduce your debts it’s important to prioritise paying off high interest debts such as personal loans and credit cards. A balance transfer card can help you repay your credit card debt faster. It lets you transfer an outstanding balance to a new Citi Credit Card at a lower or even 0% p.a interest rate to reduce the interest you pay on your existing balance, which could help you get on top of your repayments.
The way a balance transfer credit card works is that the lower or 0% interest rate applies for a set period of time such as 6, 9 or 26 months, and then reverts to the cash advance rate specific to the credit card. Use this period as a motivator and opportunity to get on top of your debts. To make the most of this lower rate, consider putting a repayment plan in place to pay off as much of the debt as possible before the interest rate rises. To help keep you motivated and on track, with a Citi branded balance transfer credit card you can easily track your repayment progress online or using the Citi Mobile® App.
Along with a repayment plan, it can be helpful to create a budget that details all your expenses and consider whether some of your non-essential spending could instead be diverted to paying off your balance transfer during this low or interest-free period. Ideally, you want to have repaid the debt in full by the time the interest-free period ends as any outstanding balance will earn interest at the higher cash advance rate. Having a clear budget can help you determine how long you will need to repay your existing debt which will help you choose the credit card that’s right for you. Check out our card selector tool or balance transfer questions to help you decide.
Some Citi branded balance transfer credit cards can also help you save in other ways. You can earn Citi reward Points as you spend and receive a credit back on some eligible purchases when you redeem your Points. You can also use your Citi reward Points to pay for things like TVs, appliances and homewares at kogan.com. Importantly, to ensure you’re helping not hindering your savings, be aware that purchases on a balance transfer card are charged at a higher retail purchase rate than the balance transfer rate, and no interest free days apply to any purchases you make.
A balance transfer credit card can help support your savings goals by giving you the space you may need to pay down your debt faster, freeing up funds that are better devoted to achieving your savings goals.