Personal Loan Transfer

Making a Personal Loan Transfer to a 0% Balance Transfer Credit Card

The majority of Balance Transfer Credit Cards are focused on the transfer of debt between credit cards or store cards, with only a couple of credit card providers, Citi and Virgin Money, permitting a personal loan transfer to 0% Balance Transfer credit card. balance transfer a personal loan to a credit card

The balance transfer of a personal loan to a credit card is an effective option where you are seeking to reduce your interest charges on your personal loan, as many of the balance transfer credit cards which accept personal loan transfers feature very low interest rates, with some offering 0% p.a. rates on the loan balance transferred.

Balance transfer a personal loan to a credit card to cut your interest charges

Transferring your debt from the high interest charges of a personal loan to a low or 0% balance transfer credit card is the first step to cutting your interest charges. To ensure you maintain these lower levels of interest charges follow these 4 rules:

1. Clear your Personal Loan Transfer in Full

To avoid incurring high interest charges on your personal loan transfer it is imperative that you manage your repayments carefully to ensure you are able to fully repay the total amount transferred, in full, prior to the end of the balance transfer period.

The heavily discounted interest rates available on Personal Loan transfers deals are ultimately designed to profit the credit card providers when customers fail to repay them, or switch to a new balance transfer deal before the end date of the balance transfer period. At the end of the balance transfer period the interest rate on any unpaid amount of the original transfer will rise to what is referred to as the revert rate, which generally tends to be either credit cards purchase or cash advance rates which are likely to be close to 20% p.a.

An approach which will help ensure you repay the transferred balance in full is to set a repayment schedule to plan how you can repay the full amount and which you are confident you can stick to for the full duration of the transfer period, which could be for as long as 18 or even 24 months.

If circumstances transpire that result in you being unable to repay the personal loan transfer in full within the balance transfer period you have the option to make a second transfer of your outstanding debt to another balance transfer credit card. The decision to take this option will need to be made well before the end of your current balance transfer period as setting up anew transfer can take up to 6 weeks.


2. Never miss the minimum monthly repayment on your personal loan transfer

To stay on track to repay your personal loan transfer off in full within the transfer period, make repaying at least the minimum monthly repayment, a number 1 priority.

Failure to make the minimum monthly repayment on your personal loan transfer can have 2 major implications on your account, firstly you are running the risk of losing your discounted interested rate on your personal loan transfer and secondly the credit card provider may apply penalty charges to your account.

Should I just repay the minimum monthly repayment each month?

As an absolute minimum you should repay the minimum monthly repayment each month as this will ensure you retain the discounted interest rate and incur no additional fees. If your circumstances allow it making repayments above the minimum monthly repayment is an excellent use for any spare cash as this will see you repay off the personal loan sooner, hopefully within the balance transfer period.


3. Do not consider your balance transfer credit card as a source of credit.

Once you have made your personal loan transfer to a balance transfer credit card it is likely the credit card provider will include an incentive as part of your credit card deal to encourage you to either use your credit card to pay for purchases or withdraw some cash. Widely available incentives include 0% p.a. Purchase rates for an initial periods and bonus reward points in return for spending on your new card within the initial months.

Using your new credit card for either a purchase or cash withdrawal will result in you adding to the debt on your credit card, a debt which you will need to repay, and quickly, to avoid incurring any interest charges.

It is important to understand that any purchases made using your balance transfer credit card, during the balance transfer promotional rate period, do not benefit from interest free days, so any purchases will incur interest charges from the date the purchase is charged to your credit card account.

If your circumstances mean you need to make purchases on your credit card you could consider applying for a separate 0% p.a. Purchase Credit Card or balance transfer offer that also features a 0% p.a. purchase rate offer for the same duration as the balance transfer.

Cash withdrawals incur interest from the day of the withdrawal

Cash Withdrawals made from your credit card can be a very expensive means of accessing ready cash as the credit card providers commence charging interest on these withdrawals from the day the withdrawal was made, so unlike purchases they do not benefit from any interest free days.. So even if you repay the value of your cash withdrawal in full at your next statement date you will still incur interest on the withdrawal amount from the date you made the withdrawal until the date it is was repaid.


4. Keep your number of credit card applications to a minimum

Keeping you credit card applications in check will help maintain a good credit report, as multiple applications in rapid succession maybe interpreted by the credit card providers as an indicator that you are desperate for credit, which generally will lead to your application being rejected.

When you apply for a personal loan transfer to a balance transfer credit card, the credit card providers will use your credit score not only to decide on an accept or reject decision, but also to decide the type of offer, in terms of interest rate level and balance transfer period, they are prepared to offer you. With a Personal Loan Transfer this transpires in 3 ways:

1. Balance Transfer Period - When making a comparison of balance transfer credit cards one of the features which will be included in the cards features is the Balance Transfer period, which is essentially the number of months for which the discounted interested rate will be applied to your personal loan transfer. The balance transfer periods included in our comparison tables are the advertised rates of the credit card providers, though this advertised period is generally only offered to applicants who have credit scores in the higher ranges, with shorter periods being offered to applicants with lower credit scores.

2. Balance Transfer Rate - In a similar vein to the balance transfer period, the advertised 0% p.a. balance transfer rates are generally only offered to applicants with high credit scores, with lower scoring applicants offered deals featuring heavily discounted rates, but not at the 0% p.a. level.

3. Credit limit amount on your credit card - Lower credit scoring applicants tend to get offered a lower credit limit, which will impact the value of the personal loan transfer you are able to transfer to the balance transfer credit card, as the balance amount tends to be a % of the credit cards approved credit limit.


How much can I save by making a Personal Loan Transfer?

The savings in interest charges which can be made by making a personal loan transfer to a 0% p.a. Balance Transfer Credit Card can be significant. The chart below shows the savings which can be made by transferring a balance from a Personal Loan with an interest rate of 14% p.a. to a 0% p.a. for 18 months Balance Transfer Credit Card. By transferring a balance of $5,000 the interest savings after paying the balance transfer fee, are $950, the last example on the chart shows a saving of $1,900 when you transfer a debt of $10,000.

Personal Loan Transfer Interest Savings



















What types of transfers can be made to Virgin Money and Citi Balance Transfer Credit Cards?

Virgin Money Balance Transfer Credit Card

Virgin Money Credit Cards accept transfers from the following account types:

  • Visa and MasterCard cards from all Australian credit card issuers.
  • Store cards, including those issued by David Jones and Myer.
  • Personal loans.
  • Line of credit.


Citi Balance Transfer Credit Card

Citi balance transfer credit cards accept transfers from the following account types:

  • Visa and MasterCard card from all Australian credit card issuers.
  • Store cards including those issued by David Jones and Myer.
  • Line of credit.
  • Personal loans.


A guide to making a Personal Loan Transfer

Follow these steps for an easy, hassle free Personal Loan Transfer:

  1. Select the Best Credit Card for your Personal Loan Transfer

The only credit card providers that currently accept Personal Loan Transfers are Citi and Virgin Money, so your comparison should be limited to the balance transfer credit card offers available from these providers. When comparing balance transfer credit cards consider including the following card features: balance transfer promotional rate, balance transfer period, revert rate and any Balance Transfer Fee.


  1. Making your Personal Loan Transfer Application

All Balance Transfer credit card offers from Virgin Money and Citi are offered for a limited time so to take advantage of your selected offer make sure that you make your application before the close date of the offer. When making your application you can include details of the Personal Loan transfer within the application, alternatively you can add this later, though there are restrictions that state within how long the Personal Loan transfer maybe requested from the date the card is issued.


  1. Decision on your Application

If approved the credit card provider will advise you that you have been accepted and confirm any conditions associated with this acceptance, these conditions may include confirmation of the balance transfer rate and transfer period being offered and the credit limit being offered on the card.


  1. Making the Personal Loan Transfer

Following approval of your application the credit card provider will then proceed to manage the transfer of your personal loan debt to your new balance transfer credit card using the account details provided within your application.


  1. Repaying the Personal Loan Transfer

Once the Personal Loan transfer has been completed you will be advised on when your 1st repayment is due and what the amount of the minimum repayment is.


Benefits of a Personal Loan Transfer

  • Reduce you interest costs to save money

By choosing to make a personal loan transfer to a balance transfer credit card you are reducing the interest rate on your debt for a fixed period of time. This saving in interest charges is complemented by the fact that a far higher proportion of any repayments of your transfer are going directly towards repaying the principal loan amount.

  • An opportunity to become debt free

The balance transfer period creates a window of opportunity where with lower interest charges, you have the opportunity to manage your finances to a budget and finally repay off your debt in full.

  • A single debt

Should you have other debts aside from your personal loan their maybe an opportunity to consolidate all of these onto your balance transfer credit card. This consolidation can make management of the debt easier and most cost effective, with one repayment per month and reduced interest charges.

Frequently Asked Questions

How are monthly repayments allocated against repaying the debt on a balance transfer credit card?

The order of payments is the sequence by which the credit card provider applies your repayments to settle your credit card balance.

Following government reforms of 2012, a new payments order has been applied to credit card contracts since July 1st, 2012. Under these reforms credit card issuers are required to direct repayments in descending order: from transactions that attract the highest interest rate to those that have the lowest interest rate, or, on which interest is not charged. With a balance transfer card therefore, payments will likely be applied in this order:

  • Interest charges
  • Fees
  • Cash advances or withdrawals
  • Standard purchases
  • Balance transfers

This order reduces the overall interest you pay, allowing you to save money on interest costs and pay off your credit card balance more quickly. 

How does the balance transfer limit impact the Personal Loan transfer amount I am able to make to a balance transfer credit card

The balance transfer limit is the maximum dollar value that you can move to the balance transfer card and is dependent on the credit limit that is approved by the credit card provider.

The maximum personal loan transfer that you can transfer to a new balance transfer card would be equal to the approved credit limit, though the majority of providers allow cardholders to transfer only up to 90 to 95 per cent of the new credit limit. The remaining part of the limit being avaialble for use on new purchases.

For how long does the Balance Transfer Rate apply to the Personal Loan Transfer?

The period during which a promotional balance transfer rate applies to the personal loan transfe is at the discretion of the credit card provider. Balance Transfer Credit Cards with the most attractive offers, 0% interest rate and no transfer fee, are available with balance transfer periods from 6 to 24 months, though to be offered these 0% p.a. deals on your Personal Loan Transfer you will need a blemish free credit report.