Consumers are enticed to transfer balances owing on credit cards, but need to be aware of all the costs, not just the benefits.
During the promotion period:-
- a lower interest rate may apply, and/or
- fees, and charges may be lower, or may be waived altogether
The credit provider must take care that consumers are not misled about the details of the offer – The Corporations Act, the ASIC Act and National Consumer Credit Protection Act, are in place to ensure a balanced message and consumers have a realist impression of the overall costs.
If an advertisement includes details of a discounted interest rate, or discounted/waived fees, the advertisement must also make clear with equal prominence, the period for which the discounted rate applies.
The advertisement must also state what the interest rate revers to after the promotional period.
Pose yourself questions such as:-
- can I pay off the debt during the promotional free period?
- will the rate after the promotional period be higher than the current rate?
- can I change my habits to avoid future credit cards interest?
There is no substitute for careful reading or asking for a second opinion from your accountant before you sign up.