What makes more financial sense?

[B0RDEX]

So due to unforeseen circumstances, the funds that I had saved for my trip to Canada in 2 months time had to be spent on an emergency, which means I will need to rely on credit card/s for the trip. I will not be able to pay the card/s off in full each month, which I am perfectly fine with - for the convenience of not cancelling my trip altogether, I don't mind at all paying some interest. Yes, it's not ideal, but I'd rather not miss out on my trip!

Since maths was never really my strong point, my question is this:

Am I better off applying for a credit card with a lower interest rate, knowing I will be revolving the balance, and paying the 3% forex fee, or
Am I better off applying for a credit card with a high interest rate that has no forex fee (ie the 28 degrees card) knowing I will cop it on higher interest charges?

I will pay off as much of the balance as I can, of course, but it certainly won't be the full balance as I'm going for 5 weeks and my last trip to Canada for 4 weeks cost me 20k...

I already have a BankWest no forex fee card with a low interest rate, which would solve my problem altogether, but I am not able to get the balance on that increased so I only have $4,000 available on there.

All advice gratefully received!
Cheers

 

[BacchusMarsh]

Am I better off applying for a credit card with a lower interest rate, knowing I will be revolving the balance, and paying the 3% forex fee, or
Am I better off applying for a credit card with a high interest rate that has no forex fee (ie the 28 degrees card) knowing I will cop it on higher interest charges?

Totally dependent on the timeline for repayment. 3% up front versus (rounding up) 2% per month (after the initial interest-free period of 55 days or whatever comes to an end).

If your credit rating is up to it, you could try to open a new credit card with an interest-free balance transfer once the spending's done.

 

[theblank]

search for loan calculators onliine. enter the amounts, interest rate and terms etc
will take you 5 mins to figure it out.
There are credit cards with interest rates of about 11%, maybe less. Thats probably about 10%pa difference to the 28D

 

[Scr77]

If you have a home loan with redraw available, you'll be paying around 5-6%. Just don't pay it off over the next 25 years!

 

[Daver6]

Or consider a personal loan/line of credit from the bank. Much lower interest rates. Credit cards must be the highest possible interest rates around.

 

[SponsorSFC]

You could put it on a forex fee free card then apply for a card with a 0% balance transfer offer when you get back and then transfer the balance. You could probably get 6-12 months at 0% but there may be a transfer fee.

I wouldn't use the balance transfer card for anything else until it is paid off though.

 

[Dr Ralph]

Personal loan or home loan redraw would be your best options. Otherwise there may be no interest transfer deals around. But you need to prioritise paying this off as quickly as possible as interest rates are usually high after the free period expires.

 

[B0RDEX]

Cheers for your suggestions all, much appreciated!

I should have specified personal loan and home loan redraw aren't an option, otherwise yeah absolutely those would have been better! My credit score has taken a hit from doing some churning over the last 6 months and refinancing a car loan, so realistically I only have one chance to apply for a card and hope it's approved. It won't be an option to apply for a card now and then apply for a 0% BT in a couple months time as I won't get approved, so I need to come up with the best plan from the get-go.

I'm anticipating a max spend of $10k (hire car fees and accomodation are a cough!), so I'm thinking my best option would be the Virgin Velocity Flyer card as it has a 0% purchase rate for 12 months. It has one of the higher forex fees at 3.3% but I'm anticipating needing the whole 12 months to pay it off, so looking at how much interest I'd pay over 12 months, it's definitely more than the ~$330 I'd pay in forex... so I think that's probably the best option! Happy to be corrected though if anyone has any further thoughts!

 

[OzEire]

I recall seeing a card with an intro rate of 0% on purchases for a period (6 mths or so), which is like a reverse 0% balance transfer.

Note that any card with an "unpaid" balance on the due date will give you a credit hit even if it's a 0% rate... to the credit agency it just looks like you didn't (or couldn't) pay it off.

 

[BacchusMarsh]

I'm thinking my best option would be the Virgin Velocity Flyer card as it has a 0% purchase rate for 12 months.

That does look like a good compromise. Best to get started in plenty of time, though, Citibank can take ages to get things sorted out.

 

[Simo]

Have a great trip and work your butt of once you get home to pay it all off... Try and do a BT or see if you can get your CC Company to do a transfer to another card and see if you can get a interest free period

 

[JohnK]

One option could be a low rate credit card with balance transfers.

With St George Vertigo you can do a balance transfer for 0% for 12 months and any other balance transfers during that period are at 0%. You can do multiple balance transfers as the statement balance needs to be paid on other credit card. Balance transfers can be requested online. Pay off the 0% balance transfer when you return from trip.

 

[B0RDEX]

One option could be a low rate credit card with balance transfers.

With St George Vertigo you can do a balance transfer for 0% for 12 months and any other balance transfers during that period are at 0%. You can do multiple balance transfers as the statement balance needs to be paid on other credit card. Balance transfers can be requested online. Pay off the 0% balance transfer when you return from trip.

Thanks John - sounds like a great option however T&C's state 0% BT applicable when requested at card application, BT's at any other time will be at the standard variable purchase rate... Shame, as that would have worked well as I could have used my BankWest card for the no forex and then transferred the balance.

 

[JohnK]

Thanks John - sounds like a great option however T&C's state 0% BT applicable when requested at card application, BT's at any other time will be at the standard variable purchase rate... Shame, as that would have worked well as I could have used my BankWest card for the no forex and then transferred the balance.

With St George? I have a Vertigo and transferred a balance last year at 0% for 12 months and have another 2-3 smaller balance transfers since and each one has been 0%. I am an existing customer. I transfer balances online and don't request anything as it all happens automatically behind the scenes.

St George is one of the better credit card providers in my opinion.

 

[B0RDEX]

With St George? I have a Vertigo and transferred a balance last year at 0% for 12 months and have another 2-3 smaller balance transfers since and each one has been 0%. I am an existing customer. I transfer balances online and don't request anything as it all happens automatically behind the scenes.

St George is one of the better credit card providers in my opinion.

Interesting! Yup, definitely St George - here's the link I'm looking at: https://info.stgeorge.com.au/creditcards/vertigo/. It's in the fine print at the bottom, "1. Promotional balance transfer rate is available when you request at card application to transfer balance(s) from... The rate will apply to balance(s) transferred (min $200 up to 95% of your approved available credit limit) for 14 months, unless the amount is paid off earlier... The variable purchase interest rate applies to balance transfers requested at any other time..."

 

[JohnK]

Interesting! Yup, definitely St George - here's the link I'm looking at: https://info.stgeorge.com.au/creditcards/vertigo/. It's in the fine print at the bottom, "1. Promotional balance transfer rate is available when you request at card application to transfer balance(s) from... The rate will apply to balance(s) transferred (min $200 up to 95% of your approved available credit limit) for 14 months, unless the amount is paid off earlier... The variable purchase interest rate applies to balance transfers requested at any other time..."

And what I'm saying is activate one small balance transfer on application and then use the website to request further balance transfers as an existing customer. In my experience St George honours the 0% on all balance transfers until expiry of the original balance transfer.

 

[casanovawa]

How about you open a new card and do a 0% balance transfer to your BankWest card of say $10,000...

That hopefully will put your BW card in credit to say $10,000 so when you spend on it it looks like it has money already on the card so doesn't generate any requirement to pay or interest owed, and you just put the other card in the draw and pay it off when you get back home?

I did this with a card, balance transferred to it and put it in positive territory...

 

[potm]

Another option is that flight centre and other travel agents are doing interest free deals. This is connected to a credit card that you get as part of it.
Might be a good option if you can book things in for a similar price.

 

[B0RDEX]

Cheers guys - was able to get the Virgin 0% purchase card at a sufficient limit to cover my whole trip, when the purchase rate promo expires in 10 months time (since the card came within 5 days of applying after all lol) my credit rating should be back up to easily apply for a 0% BT to pay off whatever is left remaining by then, if anything. I do like the idea of using a BT to put the BW card into credit but I was a bit concerned they would want a statement to confirm the balance of the card and that the plan would then fail, which would have been disastrous since I only had the one chance at getting another card!

 

[JohnK]

I do like the idea of using a BT to put the BW card into credit but I was a bit concerned they would want a statement to confirm the balance of the card and that the plan would then fail, which would have been disastrous since I only had the one chance at getting another card!

For what it's worth I have never been asked for a statement of the other credit card to confirm the balance.