Why You Need To Avoid Cash Transactions With 0% Balance Transfer Credit Card?
July 15th, 2010
Avoiding cash transactions on 0% balance transfer cards is the first thing you need to set in place when you first get a new card.
You must make it a rule that is never broken for any reason or you will once again be heading down the road of debt.
0% p.a. for 6 months with 2% handling fee
Featured Balance Transfer Card
The HSBC Credit Card has an excellent balance transfer of which means that you will save money on any balances you bring across to the card because you will not being paying interest on that amount
- $0 annual fee
- 17.99% p.a. on purchases
- 0% p.a. for 6 months with 2% handling fee on balance transfers
- Cash Advance Rate of 21.99% p.a.
- 55 days interest free
Avoiding cash transactions on 0% balance transfer cards
Below you will find the reasons why avoiding cash transactions on 0% balance transfer cards is a must. Don’t make the same mistake many others have made and end up in a pile of debt with your new balance transfer credit card.
1. High interest rate
Just about every Australian credit card available will charge an extremely high rate of interest every time a cash advance action is made using the card. These rates can be as high as 20% or more and can add up very quickly indeed. Even at the best of times cash advances should never be made on any credit card except in the case of an extreme emergency, and this emergency must be very extreme.
2. Repayments aren’t made towards the cash advance balance
When you get a balance transfer card with a 0% rate of interest you will have different balances on the card. You will have one balance for purchases, one for cash advances and one for the debt that has been transferred.
The way a credit card works is repayments are always made to the balance with the lowest rate of interest. No payments are made to the other balances with a higher interest rate until the low rate balance has been completely paid off.
If you make a cash advance on your balance transfer credit card, it will sit on the side accruing interest while you are paying off the debt you have transferred. This will add up very quickly since the cash advance has a very high interest rate.
Once you have paid off your balance transfer you will then have a new debt to handle from making cash advances on that card. This is why avoiding cash transactions on 0% balance transfer cards is so important.
Fees and charges
Making cash advances with a credit card will likely incur hefty charges and fees that you could certainly do without. This is on top of the high interest rate that you are being charged, and all of these fees, charges and interest will all turn into one enormous ball of debt before you even realize what is happening.
Avoiding cash transactions on 0% balance transfer cards is your best line of defense against building up another debt on your balance transfer credit card. You will avoid both a heavy debt and a lot of frustration by using your new card to clear up your debt only and using it for nothing else.
If you need a card for the occassional cash advance, check out our table of low cash advance credit cards.
Editors Choice: Featured Credit Card Deals
| Interest Rate (p.a.) | Balance Transfer Rate (p.a.) | Annual fee | Cash Advance Rate (p.a.) | ||
|---|---|---|---|---|---|
 Westpac 55 Day Credit Card | 0% for 5 months (reverts to 19.59% ) | 3.99% for 6 months | $0 | 21.49% |
|
 Citibank Clear Platinum Card | 11.99% | 2.9% for 12 months | $99 | 21.74% |
|
