Want to pay 0% on your credit card debt? Get in quick

19 hours ago 3

Opinion

September 13, 2025 — 5.09am

One of my favourite financial repair-and-rebuild strategies is the 0 per cent balance transfer.

In the credit card concept that came to Australia from Britain two decades ago, new customers get an introductory rate of zero on balances they transfer from a rival institution, for a period of time.

The disappearance of many balance transfer offers shows that banks are willing to pay less for customers.

However, that period of time is now shrinking. Or if it is not, the interest rate is growing. Exclusive analysis from datahouse Mozo reveals that virtually all institutions have curbed their deals this year.

Two years ago, a 0 per cent transfer allowed you to escape interest for as long as 34 months (the best was Bankwest’s Zero MasterCard or Zero Platinum MasterCard). It’s now just 26 months.

But more telling is that Mozo says there is only one provider left offering 0 per cent for that length of time: ANZ (on its Low Rate card). You can now get only 24 months with BankWest (Breeze/Breeze Platinum), Latitude (GO Mastercard) and Virgin Money (Anytime Rewards/Velocity Flyer).

Rounding out the top five deals is Westpac (Low Rate card), which is giving only 20 months. But, notably, the Westpac-owned banks now seem to be former 0 per cent players, having stopped the previous deals. St George, Bank of Melbourne and Bank of SA all carry identical, inferior offerings.

Buy now pay later seems an unstoppable juggernaut of a financial innovation.

The interest-free status of Bank of SA’s Vertigo card has been removed and replaced this year with a 6.99 per cent balance transfer rate for 36 months (it was formerly 24 months).

Bank of Melbourne and St George have that same deal, but they ceased offering 0 per cent and switched to 0.99 per cent, before this year. (That deal was also slightly longer at 28 months).

We can only presume that Westpac is worried about the cost of its credit card business and trying to enhance profitability. It’s by no means alone.

Citi has taken its Clear credit card out of the interest-free market too this year, replacing its deal of 0 per cent for 24 months with an offering of 5.99 per cent for 36 months.

And NAB has removed its deal of 0 per cent for 24 months and commenced charging 5.99 per cent without increasing the timeframe.

Mozo banking analyst Peter Marshall says the disappearance of many balance transfer offers reflects the overall state of the credit card market: banks are willing to pay less for customers.

“So, we’re seeing annual fees go up and rewards programs being devalued,” he says. “Even recently, ING had a fee-free credit card and started applying a $49 annual fee.”

The steady erosion of rewards points has been through lower earn rates and the diminished redemption value of points.

Meanwhile, credit card interest rates have long been notoriously unresponsive to official cash rate moves but Marshall reports that smaller banks, particularly the mutuals, have often moved in lock step. Not after the latest rate cut, though: “Even the low-rate options for mutuals are not getting priced down with the cash rate,” Marshall says.

Yes, things are tight in credit card land. And that’s even before a mooted ban on card fees. The reason is probably falling demand.

Buy now pay later seems an unstoppable juggernaut of a financial innovation, allowing as it does people to pay off purchases in instalments.

Government regulation has only recently caught up to the product that had formerly slipped through the cracks of the credit code due to the fact there is never interest: the business model is instead charging merchants (and late payers).

But it doesn’t solve the problem of existing debt that 0 per cent balance transfers do. And while there has been a sharp fall in the number of credit cards on issue in Australia since mid-2024, outstanding debt has been forging higher at nearly $40 billion in total, says RBA data.

If you transfer a credit card balance, you need to beware of high ‘revert’ interest rates at the end of no- or low-interest periods. You need to also realise that new spending on one of these cards will not get favourable interest treatment and will instead attract punitive interest.

But used smartly, a 0 per cent balance transfer credit card gives you a no-interest window of opportunity to clear your debt once and for all. You just need to divide your debt by the number of months on offer and move heaven and earth to repay that amount each time.

But with the market reducing, or possibly even closing, you had better get in quick.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, X and Instagram.

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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