How do balance transfers work?

[Isochronous]

I've never tried one, but am about to. But I was wondering:

Say a new card makes me a BT offer, and say the maximum I could transfer under the standard 95% of credit limit rule is $5,000.

Also suppose my existing credit card only has an outstanding balance of $1,000.

Obviously I can transfer the $1,000 owing and that reduces the card to 0.

If I tell the new card with the BT offer that I'd like to transfer $5,000, what happns? Will they put my existing card $4,000 into credit?

 

[Beta4Me]

They'll only take what's on your old card so just the $1K. I'd be tempted to max out the old card before the balance transfer and stick it in a high-interest savings account if you were getting a 0% promo rate or the like on your balance transfer.

 

[casanovawa]

I bought a car on a credit card and then over a couple of years balanced transferred it across several cards, some had like 0%, one 0.99%, highest one was part of it onto like a 2.9% card i think, meantime i had had all the money in a high interest earning account earning between about 5.5%-6.30% interest or so... I figured even after taking the tax out i would have to pay on the interest i received from my savings account the bank was basically paying me for the loan... And paid it all off in 2 years... Definitely better than a 14% personal/car loan...

 

[The Rok]

I bought a car on a credit card and then over a couple of years balanced transferred it across several cards, some had like 0%, one 0.99%, highest one was part of it onto like a 2.9% card i think, meantime i had had all the money in a high interest earning account earning between about 5.5%-6.30% interest or so... I figured even after taking the tax out i would have to pay on the interest i received from my savings account the bank was basically paying me for the loan... And paid it all off in 2 years... Definitely better than a 14% personal/car loan...

14% would be a very expensive car loan!

 

[medhead]

It depends on the card issuer. The big banks are all pretty good at making sure there is a debt owed. However, I have had a balance transfer where I nominated the amount to be transferred. And they then sent me a cheque for that amount.


Sent from the Throne

 

[Doug_Westcott]

Other Banks (ANZ??) will simply transfer the amount requested without any check as to the amount owing on the other Bank/FI's card.

 

[Newk]

I have never had any issues with the money being transferred creating a positive balance. Can anyone with any industry knowledge tell us if the banks could find out your balance in another company's credit card?

I would encourage the OP to take advantage of any offers.
Be careful with mixing up purchases on the card from which the balance transfer is made. The interest payments on the purchases will get you.

 

[Meggsy]

Be careful with mixing up purchases on the card from which the balance transfer is made. The interest payments on the purchases will get you.

By law now you may request your bank to set a hierarchy for payments to come off your highest interest generating credit first. This law came in mid year and applies to all new credit card applications.

 

[Newk]

By law now you may request your bank to set a hierarchy for payments to come off your highest interest generating credit first. This law came in mid year and applies to all new credit card applications.

Thanks. There are still cards that will be offering transfers that will work under the old rules.
So, indeed if the BT goes with a new card you should be fine.

 

[Isochronous]

Any experience with Woolworths? (which I assume would be HSBC)

 

[Isochronous]

Also does it matter if I BT where the card is mostly having cash withdrawals used (e.g. I'm thinking of withdrawing a heap of forex on my 28Deg card and BTing it)