The 5 biggest balance transfer traps to avoid in 2018

Ceyda Erem

09 Jan 2018

Bt traps content

Choosing to transfer debt onto a balance transfer credit card is often a no-brainer for many Aussies because of the alluring 0% interest rate. But with this handy zero interest offer comes a lot of misconceptions about how it can be used effectively, leading many card holders to fall into dangerous balance transfer traps.

If you are thinking of using a balance transfer credit card to crush debt, here are the five biggest balance transfer traps to avoid.

5 balance transfer credit cards to help crush debt

Rates updated daily. Advertiser disclosure.

  • Great Southern Bank Low Rate Credit Card

    0% p.a. for 25 months and then 21.74% p.a.

    11.99% p.a.

    $49 $0 in the first year

    0% balance transfer rate for 20 months and up to 55 interest free days. No annual fee for the first year and $49 after. Mozo Experts Choice Balance Transfer Platinum Credit Card Winner 2020^

    • 11.99% p.a.

    • -

    • 0% p.a. for 25 months and then 21.74% p.a.

    • 21.74% p.a.

    • 55

    • 0.0

    • 3.40%

    • $49 $0 in the first year

    • $12.50

    • 2.00%, Min $3.50

    Read our Mozo Review to learn more about the Low Rate Credit Card

    Details Close

  • Apply By 04 October 2021

    Kogan Money Black Card

    0% p.a. for 12 months and then 21.74% p.a.

    20.99% p.a.

    $0

    Kogan Money Black Card has no annual fee and no cap or expiry date on points. It comes with a 55 interest free days on purchases and a 0% balance transfer rate for the first 12 months. Earn up to $400 in Kogan.com Credit, $50 Credit on first eligible spend in 30 days and $350 Credit when you spend $1,500 on eligible purchases in 90 days from card approval.

    • 20.99% p.a.

    • -

    • 0% p.a. for 12 months and then 21.74% p.a.

    • 21.74% p.a.

    • 55

    • 3.40%

    • $0

    • $30.00

    • 3.50%, min $5.00

    Read our Mozo Review to learn more about the Black Card

    Details Close

  • Apply By 31 October 2021

    Bendigo Bank Low Rate Credit Card

    0% p.a. for 12 months and then 11.99% p.a. (2.00% balance transfer fee)

    0% p.a. for 12 months then 11.99% p.a.

    $45

    0% p.a. on purchases for up to 12 months (Reverts to 11.99% p.a). Also 0% balance transfer for up to 12 months. Low annual fee of $45 and no fees for additional cardholders.

    • 0% p.a. for 12 months then 11.99% p.a.

    • 0% p.a. for 12 months

    • 0% p.a. for 12 months and then 11.99% p.a. (2.00% balance transfer fee)

    • 13.99% p.a.

    • 55

    • 3.00%

    • $45

    • $15.00

    • 0.50%, Min $3.25

    Read our Mozo Review to learn more about the Low Rate Credit Card

    Details Close

  • Great Southern Bank Platinum Credit Card

    0% p.a. for 25 months and then 21.74% p.a.

    19.99% p.a.

    $149 $0 in the first year

    0% p.a. balance transfer, $0 annual fee for the first year and also receive 1 rewards point for every dollar spent. Purchase protection insurance. Mozo Experts Choice Balance Transfer Platinum Credit Card Winner 2020^.

    • 19.99% p.a.

    • -

    • 0% p.a. for 25 months and then 21.74% p.a.

    • 21.74% p.a.

    • 55

    • 0.0

    • 3.40%

    • $149 $0 in the first year

    • $12.50

    • 2.00%, Min $3.50

    Read our Mozo Review to learn more about the Platinum Credit Card

    Details Close

^See information about the Mozo Experts Choice Credit cards Awards

Only making the minimum repayment 

While you may jump for joy at the minimum amount your are eligible to pay each month, do not give in to this temptation. By only paying the minimum amount, you run the risk of not being able to pay off the debt by the time the interest-free period ends, and winding up paying interest at the higher revert rate.

Moving debt around 

Aha, you think you’ve found the answer to escaping the dreaded revert rate? Does it involve moving from one BT card to another? Not so fast. Yes, you will avoid paying interest on your debt, but jumping from one card to another can hurt your credit score, especially if your application is declined. Plus, this doesn’t fix the problem of your debt - it just delays having to deal with paying off your balance.

Using those rewards points for spending

Remember those misconceptions we mentioned earlier? This is one of them. Your balance transfer card is designed to help you climb out of debt, not make the hole deeper. If you use your card to make purchases, you will have to pay off this spending first, before moving onto other debt. And if you withdraw money using the card, you will have to pay the cash advance rate from the day you make the withdrawal until it’s paid off in full.

Forgetting about your old card 

First of all, it’s important to keep in mind that balance transfers usually take up to 2 weeks to complete, so you’ll still need to continue making repayments on your old card in the meantime. Otherwise, you may face a late payment fee. Another trap to avoid is leaving your old card account open and either paying an annual fee for a card you’re not using, or falling back into the habit of spending on it and starting the debt cycle all over again.

Paying transfer fees 

Balance transfer fees typically range between 1% - 3% of the balance you’re transferring and are usually charged for BT cards with longer interest-free periods, like 18 - 24 months. This can add up over time if you find yourself often moving debt around, or if you’re transferring a hefty balance.

But the good news is, balance transfer fees are avoidable you just need to look for a BT card offer with no transfer fees.